Campbell open to offers from rich buyers
Published:Friday | April 29, 2011 | 12:00 AM
Sabrina Gordon, Business Reporter
Ryland Campbell, group president and the largest shareholder of the Capital and Credit Financial Group (CCFG), has confirmed that he is willing to sell or forge a strategic alliance but said the investor must "have deep pockets" and the potential to advance the operations of the group.
There has been talk of Capital and Credit being courted by larger players in the market, which assumed a new urgency recently as the merchant banking subsidiary's balance sheet faces scrutiny.
PanCaribbeanBank, ultimately owned by Sagicor, is touted as the likely buyer, but Campbell would not confirm negotiations, and PanCaribbean group's Donovan Perkins said he would neither confirm nor deny the reports, as is company policy.
Campbell, speaking at CCFG's annual general meeting in Kingston Wednesday, said the group has been approached by several interested entities.
"What we are looking for is somebody with a deep pocket and some reach that could take controlling interest of Capital and Credit to help us with the move forward or buy it out if that is the case," he told shareholders.
Aside from Campbell, who owns 43 per cent of the group, other big shareholders include Andrew Cocking with about 14 per cent, and National Insurance Fund, 21 per cent.
Campbell said he has had offers in the past, which have not panned out, but is now inclined to cede control of the company, saying the change in the economic environment was forcing changes on companies like his own.
"If you are in a business and the business environment changes - and keeps on changing - and you fail to recognise it, you too will go out of business," he said.
"We will continue our strategies to maintain stability ... which include the fulfilment of a strong strategic alliance to deepen the group business and strengthen its capacity to enhance shareholder value."
CCFG comprises three divisions: merchant banking and securities, money transfer and remittance business; and a unit-trust operation. The group also owns an international broker dealer, Capital and Credit International (CCII), based in Florida.
At the end of its financial year in December 2010, CCFG recorded net profit of J$287.7 million, a marginal drop of J$3 million from the year before.
Its assets under management also dropped from J$43.7 billion to J$39.5 billion last year, while its operating cash remains J$3.5 billion in deficit.
The group reported a net worth of J$2.6 billion in 2010. Its current stock market value, at J$3.85 per share, is J$3.6 billion.
CCFG launched into the US brokerage market in 2007 with the set-up of CCII, but the brokerage has not met expectations and has since forged an alliance with an American investment banking outfit as they position themselves to gain wider inroads into the industry.
In January 2010, CCFG inked a deal with Blaylock Robert Van (BRV) to collapse CCII into that entity's operation. The deal gave CCFG a one per cent ownership in BRV with the option to increase its stake to 15 per cent.
CCII clients have been transferred to BRV but CCFG still retains the US dealer licence.
"We came to a point where we and the US system have been in turmoil," said Campbell.
"Little us entered at the wrong time and we couldn't make an impression despite efforts. But the licence is very hard to get so we have decided not to dispose of it yet."
Indeed, executives cited the value of this US licence as one of the attractive selling points for the group.
"Getting the broker dealer licence is a very difficult thing and so is very valuable. Some of those entities interested in getting Capital and Credit, while they have a particular interest in the bank, some of them have a very big interest in the broker dealer because they see that as a way in which they can expand their business outside of Jamaica and go into the diaspora to provide a second tier business," said Andrew Cocking, deputy group president and chief executive officer of the group's international business.
"We believe that any entity that wants to partner or acquire us will see this as very valuable and we see it enhancing the value of the group to any third party who is showing interest in us."
Performance of the unit trust, Capital and Credit Fund Managers, which offers three funds, is said to be stable.
Recently though, questions have been raised about the performance of Capital and Credit Merchant Bank, particularly its non-performing loan portfolio.
Curtis Martin, head of the banking division, says however, that the loans are covered by collateral valued at two to three times the debt.
The CCMB annual meeting, which took place right after CCFG's, was said to be private, according to public relations manager Shellie-Ann Wilson-Reynolds, after the company's mid-April delisting.
Cocking also reported that the remittance business has seen growth in transaction volumes from 87,125 to 102,000 in 2010.
"For 2011, we are seeing an increase in the volume of transactions and what we have found is that a lot of the third party remitters are now coming to us; so we are the entity which has multiple payout partners and our focus is to make sure we can continue to grow on that opportunity," he said.
CCFG, he confirmed, is selling its remittance business in Cayman Islands, Capital & Credit Payment Systems Limited, but Cocking did not disclose the identity of the buyer.
Campbell said those negotiations were advanced.