Proven pays US$32m for Cayman bank
Published:Friday | February 4, 2022 | 12:10 AM
Proven Investments Limited has wrapped up the acquisition of Fidelity Bank in Cayman for US$31.83 million, and plans to effectively double its return on investment by initially moving a chunk of cash to higher-yielding investments.
Currently, the return on investment stands at about 8.0 per cent, said Proven Group CEO Christopher Williams.
“We are targeting them to hit a 15 per cent return on investment. We want them to get there in two years,” he said.
Proven acquired 100 per cent of the shares in Fidelity Bank (Cayman) Limited, FBC, from Fidelity Bank & Trust International Limited. The deal, which was announced last year, closed on Tuesday, February 1.
FBC holds assets of US$354 million. After subtracting liabilities, its book value falls to around nine per cent of that.
“The net asset value is US$31 million and that’s what we paid for it,” said Williams.
He added that Fidelity is sitting on “a lot of cash” that it parks in a US bank as deposits, on which it earns much less than one per cent.
“Let’s not talk about the interest they are earning on it. That’s not important. But there is a lot of cash on the balance sheet, and we want to deploy that cash into the efficient risk-rated assets,” he said.
In other words, Proven can simply move the cash into safe instruments that earn multiples of that figure. Outside of that, Proven said the bank is efficiently run.
“We are comfortable with it,” Williams said of the operations.
The current staff will continue to run the bank, led by Gowon Bowe, who has been CEO since 2017.
Fidelity Bank (Cayman) Limited is a financial services company incorporated in the Cayman Islands and is licensed under the Bank and Trust Companies Act as a ‘Category A’ bank to carry on banking business in the Cayman Islands. This licence allows FBC to conduct banking operations both in the domestic and international markets. With two branches in Grand Cayman, the bank provides services to residents and non-residents.
The acquisition of FBC was financed in part from funds raised by Proven Investment Limited’s additional public offering of shares last year.
Proven Investments held equity of US$167 million up to September 2021. It earned US$4.4 million in profit for that quarter, compared to US$3.4 million a year earlier.
“We are encouraging our shareholders to continue to have confidence in us,” Williams said.
The company focuses on three main segments: banking and financial services, led by Johann Heaven; real estate, led by Aisha Campbell; and portfolio company investments, led by Nerisha Farquharson. It sees banking and real estate as core operations.
FBC will fall under subsidiary Proven Bank Holdings Limited. Over the next two years, Proven will rebrand the bank, taking into consideration the international clientele it serves.