IFC buys 4% of Sagicor
Published:Friday | April 1, 2011 | 12:00 AM
Deal values insurer at US$500m
IFC, the affiliated World Bank financier of private-sector companies, has taken a four per cent stake in regional insurer Sagicor Financial Corporation under a US$100-million deal that pumps fresh capital into the insurance group to shore up its equity base.
IFC is investing up to US$20 million to buy the four per cent stake, which translates to more than 10.6 million of Sagicor's 266 million ordinary shares on the Barbados Stock Exchange - pricing the insurance group at US$500 million or US$1.88 per share by Financial Gleaner estimates.
The deal places a US35 cent premium on the stock's current US$1.53 or BDS$3.06 trading price in home market Barbados
Additionally, IFC will invest US$80 million in convertible and redeemable preference shares in the Barbados-based company, which is the ultimate parent of Kingston-based Sagicor Life Jamaica and Pan Caribbean Financial Services.
The deal was successfully closed and announced Thursday in a joint IFC-Sagicor statement.
"The benefits of this partnership and investment to the wider communities will become evident as Sagicor deploys the funds raised for growth within the region," said Sagicor chairman Stephen McNamara.
Sagicor Financial traded flat in Trinidad at TT$8.50 on volumes of 27,346 units Thursday, but did not trade at all in Barbados. The company is not listed on the Kingston exchange.
IFC said the investment demonstrates confidence in the long-term future of the Caribbean insurance industry, which has been battered by market failures and a tightening of credit arising from the 2008 global economic crisis.
"Insurance gives people the security they need to grow businesses and invest in the well-being of their families," said IFC executive vice-president and Chief Executive Officer Lars Thunell.
"This partnership between IFC and Sagicor will promote greater access to more types of insurance products in the region," he said.
In February, Sagicor Financial had announced that it was in discussion with the IFC in a deal that would mimic the position taken by the financing agency in another regional company Guardian Holdings Limited, a rival to Sagicor.
Sagicor Financial said the investment would provide additional long-term capital the company needs to pursue grow the business regionally.
The US$100-million investment by IFC in Sagicor represents the largest ever in the insurance sector, the agency said.
Its deal with Guardian, in which IFC acquired 13 per cent of the ordinary shareholding, was worth US$75 million.
In 2009, the IFC also acquired 20 per cent of Jamaica's First Global Bank for US$20 million.
Sagicor Group - whose assets are valued at around US$4.9 billion, and equity US$744 million at September 2010 - offers life, health, property and casualty insurance, as well as annuities, pensions and mutual fund products in 22 countries throughout the Caribbean, the United States and the United Kingdom.
The Caribbean accounts for 51 per cent of total revenue, the UK 37 per cent, and US 12 per cent.
It is a dominant player in the individual and group life and health insurance in Barbados, Jamaica and the East Caribbean region, and a significant provider in the Trinidad and Tobago market, but provides services to a lesser extent in other Caribbean markets.
Through its Jamaican subsidiary, Sagicor Life, the group is now positioning to enter the Latin American market, starting with Costa Rica.