Home' Trinidad and Tobago Guardian : November 23rd 2014 Contents History was created on
Thursday when the chair-
man of three of T&T s pre-
mier institutional investors
signed documents to con-
summate the acquisition of
the equity of Pan West Engineers and Con-
structors, the GE Capital subsidiary that owned
the ten per cent block of Phoenix Park Gas
The National Insurance Board (NIB), the
Unit Trust Corporation (UTC) and National
Enterprises Ltd (NEL) purchased the 9.22 mil-
lion shares in Phoenix Park, a natural gas down-
stream producer based on the Point Lisas
Industrial Estate, for a total consideration of
This price is about ten per cent more than
the US$600 million that state-owned National
Gas Company (NGC) paid for a 39 per cent
stake in Phoenix Park from ConocoPhillips in
Questioned on the fact that the three local
institutional investors paid more than US$153
million for the shares, UTC chairman Wendell
Mottley said: "Our purchase price was sup-
ported by our valuations, especially discounted
dividend flow and we are in this to clip the
coupons---for the dividends.
"The dividends that we forecast, based on
past performance and what we see in the future,
would give us a very solid return, and that is
the interest to us as passive investors."
A NEL official at the Hyatt on Thursday
said the higher price paid by the consortium
was due to the fact that the sale of this ten
per cent block by GE Capital was as a result
of a public, international competitive bidding
process, whereas NGC purchased its stake fol-
lowing bilateral negotiations with Cono-
The official also noted that NGC, which had
previously owned a ten per cent effective stake
in Phoenix Park, received $139 million in div-
idends in 2013 and $133 million in 2014, which
means the actual dividend yield on the existing
ten per cent stake is about 12 per cent.
In comparison, to the 12 per cent effective
dividend yield earned by NEL from its ten per
cent stake in Phoenix Park, the highest yielding
T&T-based stocks, as at Friday s date, are:
• NFM with a yield of 4.5 per cent;
• Witco yielding 3.75 per cent;
• Republic Bank at 3.54 per cent; and
• Unilever at 3.04 per cent.
Bharath said that based on the US$168 mil-
lion sale price, the price to earnings (PE) ratio
was 8.3, which compared to other oil and gas
companies "was extremely attractive, given
the kind of yields it is generating."
Mottley added that the consortium pur-
chased an energy asset trading at 8.3 times its
earnings with a yield of close to 12 per cent,
whereas a company like Republic Bank is cur-
rently trading at 16 times its earnings. To com-
plete the comparison, Republic Bank has a div-
idend yield of less than 4 per cent and profit
growth of 3 per cent.
Asked about Phoenix Park s growth
prospects, NEL chairman, Kenny Lue Chee
Lip said the producer and marketer of propane,
butane and natural gasoline to regional markets
is considering building a new facility on the
Union Industrial Estate in La Brea.
Mottley said such a project would generate
considerable upside for investors in Phoenix
Park, but it formed no part of the valuation
exercise conducted by the consortium.
Lue Chee Lip said that the value of Phoenix
Park lies in the products it is able to extract
from the natural gas stream. At this point, the
natural gas being fractionated by Phoenix Park
is unusually dry, which provides a potential
upside for the company if new, wetter gas is
Mottley said Phoenix Park has been able
successful in consistently selling small cargoes
in the Caribbean market "under the radar of
bigger players, who might find it a nuisance
to contract small ships to get into small ports."
As a result of the company s selling its prod-
ucts mainly to small Caribbean markets, Mot-
tley said he did not think that shale gas from
the US was a threat to Phoenix Park s future
Responding to trepidation expressed by
Finance Minister Larry Howai---in a Business
Guardiaqn interview earlier this month---that
the acquisition would dampen the appetite of
the three institutional investors for the upcom-
ing Initial Public Offering of Phoenix Park
shares, Bharath said the acquisition would be
"a catalyst for more capital market investment
and capital efficiency.
"There is a lot of inefficient use of capital
on the sidelines. The IPO would create another
opportunity to invest in a high-yielding, mature
and attractive stock."
NEL s Lue Chee Lip added: "Through this
exercise, we know the company s potential.
We know its value. If more shares come on to
the market and are offered to us at an attractive
price, I don t see how we would not take it
up. I don t see the appetitite for Phoenix Park
shares in the IPO being reduced from our side."
UTC s Mottley said: "We were able to give
that assurance to the minister and furthermore
, due to the fact that we have done proper due
diligence on this company, we have under-
written the IPO as a result of the work we
A UTC official at the meeting said that it
has a ten per cent limit on ownership in any
one company, which means that the UTC can
acquire nearly 7 per cent more shares in Phoenix
Park in an IPO.
All three chairmen said the consortium
approach was "most definitely" possible for
the NIB, UTC and NEL in the future.
Providing some background to this first con-
sortium purchase, Bharath said the NIB was
approached by GE Capital, the owners of Pan
West Engineers, to submit a bid for the block
of shares in a competitive arrangement.
Bharath said: "We were then approached by
the Unit Trust who suggested to us that it
would be better if we did not bid against each
other, which would bid the price up.
"Forming a consortium would diversify the
concentration risk on each of our balance sheets
and keep the bid price at something we all
He said the NIB thought that was an excellent
idea and, with National Enterprises Ltd (NEL)
coming on board shortly thereafter, the stage
was set for the successful transaction.
On the issue of possible future acquisitions
by the consortium, UTC s Mottley said: "Attrac-
tive energy plays have been beyond the reach
of the t&T investing public, both institutional
"We at the UTC welcome this collaboration
with NEL and NIB as it has borne fruit and
we hope this is the first of more."
NOVEMBER 23 • 2014 www.guardian.co.tt SUNDAY BUSINESS GUARDIAN
COMMENTARY | SBG3
Locals team up to buy Phoenix Park stake
Wendell Mottley, Chairman, Unit Trust Corporation, UTC, (front,center) is all smiles as he sits with Kenny Lue Chee Lip, chairman, National Enterprises Limited, NEL, (left) and Adrian Bharath,
Chairman, National Insurance Board, NIB, following the signing of the historic investment deal at the Hyatt Regency, Wrightson Road, Port of Spain, November 20, 2014.
They are flanked by members of the consortium's team that worked on the investment deal.
(Standing L-R) Krishnadath Ramlogan, General Manager, NEL, Sekou Mark, Vice President, Investment, Research and Portfolio Management (IRPM) UTC, Philip Williams, Manager, Research,
IRPM, UTC, KarenGopaul, Executive Director (Ag.), NIB, Christopher Clarke, Investment Manager, NIB, and Navin Rajkumar, Executive Manager, Investments, NIB. Missing is Karen Gayadeen-
Gosine, Assistant Vice President, IRPM,UTC.
Photo: Karla Ramoo
Continued on Page 5
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