Sagicor targets US$160m cash from rights issue
Published:Wednesday | June 22, 2011 | 12:00 AM
Barbados-based insurance giant Sagicor Financial Corporation plans this week to raise up to US$160 million (BDS$320 million) via a rights issue and share subscription open to existing shareholders, including new minority partner IFC.
The cash raised in the offering of one new share for every four held - alongside capital raised from the IFC share subscription - will finance expansion mainly in Trinidad & Tobago, Sagicor told its 37,700 shareholders in a notice published this month.
The IFC deal, worth US$100 million, gave the World Bank affiliate a four per cent stake in the insurance group.
Sagicor 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 group recorded a 11.1 million net loss for its March quarter 2011 from US$345.9 million in revenues.
Rights offer
The rights offer, which opened June 15 and closes on June 28, will allocate up to 12.26 million additional common shares and an additional 120 million preference shares to stockholders.
Sagicor had 290 million outstanding shares and US$541.4 million in shareholder equity up to March 2011.
"The company proposes to raise gross proceeds of up to US$160 million from the rights issue and the new preference shares subscription. The minimum gross proceeds to be raised are US$100 million," read a statement signed jointly by Stephen McNamara, chairman, and Dodridge Miller, president and chief executive officer.
Earlier this year, the company entered into a subscription and policy agreement with the IFC, an affiliate member of the World Bank Group and the largest global finance institution focused on the private sector in emerging markets.
"This level of investment by the IFC is the largest ever by the IFC in the insurance sector and the IFC's largest investment to date in a single Caribbean entity," Sagicor said.
The regional insurance powerhouse says it intends to use the funds to deepen its market penetration in its Caribbean markets.
It is already a dominant player in the individual and group life and health insurance in Barbados, Jamaica and the East Caribbean region.
Currently, the Caribbean accounts for about half of Sagicor's total revenue, the UK a third, and the remainder in the US.
"The company's current strategy is to focus on the Trinidad & Tobago market where significant opportunities exist for further growth. The funding will significantly enhance the company's financial position and provide it with additional long-term capital to pursue its regional growth and expansion strategy. It will cement Sagicor's position as the leading provider of insurance and ancillary financial services in the Caribbean," Sagicor said.
The deal struck with IFC is similar to the transaction between its rival, Guardian Holdings Limited and IFC. The IFC acquired 13 per cent of the ordinary shareholding in Guardian worth US$75 million. In 2009, the IFC also acquired 20 per cent of Jamaica's First Global Bank for US$20 million.