Home' Trinidad and Tobago Guardian : May 5th 2016 Contents BG4 COVER STORY
BUSINESS GUARDIAN www.guardian.co.tt MAY 5 • 2016
The National Commercial
Bank of Jamaica s (NCBJ)
desire to become a major
player in the regional and
global financial services sector was one of the
main reasons cited by Michael Lee-Chin, com-
pany chairman, for the acquisition a 29.9 per cent stake in
Guardian Holdings Ltd (GHL).
In an exclusive interview with the Business Guardian, the
Jamaican business magnate noted GHL s solid operating history
and presence across 22 regional territories as immediately pro-
viding the right platform for NCBJ to recognise its regional
When news of NCBJ s acquisition of the majority shareholding
in GHL broke, natural among the thoughts of regional investors
was getting an understanding of the motivation underpinning
such a large transaction.
To this enquiry Lee-Chin stated: "NCBJ is predominantly
a Jamaican institution making most of its revenues from Jamaica.
We have an ambition to become more regional in our operations
and GHL is a wonderful asset that leap-frogged to us immediately
as being a well-managed company with a great footprint across
Going further, he said: "GHL s main revenue source is Trinidad,
and Trinidad today is a wonderful place to be investing in. If
we (NCBJ) were scanning the world and asking ourselves where
would be the best place to put the next investment dollar, we d
put it in a place with solid governance, a place that we re
familiar with and understand, and a place where there are
people who we trust and have confidence in. All those con-
siderations taken together make Trinidad a fantastic place to
be investing in today."
When asked about what value NCBJ would bring to GHL
by way of its majority shareholding, the Jamaican entrepreneur
pointed to the relative strengths of both companies.
"GHL has done a wonderful job in the insurance underwriting
business. Their underwriting results are world class. What that
company would benefit from is our knowledge, expertise and
passion for investing. We have a proven track record of suc-
cessfully investing in quality long-term assets and we see sig-
nificant value added to GHL by being able to benefit from our
domain experience in the area of capital allocation. It is a won-
derful platform from which we can make solid long-term
Questioned on the kind and type of long-term investments
that could potentially take place, Lee-Chin said: "We re focused
primarily on long-term illiquid assets. This could range from
infrastructure, a power plant, real estate, a toll road, an airport
so assets of that nature." He was, however, quick to note that
no single investment has as yet been undertaken.
Acquiring 29.9 per cent of the shares outstanding puts NCBJ
on the threshold of triggering a mandatory takeover offer for
the remaining shares of GHL.
When asked about the rationale for taking a position just
below the mandatory takeover limit, Lee-Chin said: "We loved
what we saw in GHL so much that we decided we wanted to
bump our position up to the limit before we triggered a takeover
Questioned on NCBJ s intention to acquire the remaining
shares outstanding, he said: "We are not prepared to go beyond
our stake in the company at this time. This is a big investment
for us. The hallmark of our investing philosophy is that we
invest in things we understand. We know GHL s business fairly
well but we want to be more granularly familiar with all the
nuances and key drivers of its operations."
Asked to elaborate further on his investment philosophy as
it relates to the GHL acquisition, Lee-Chin said there were
certain criteria that had to be met.
"When we make decisions to invest anywhere there are three
preconditions that have to be met.
Firstly, there must be a difference
between perception and reality. Only
when this difference exists is there the
opportunity for creating fantastic
returns and outsized wealth.
Secondly, there must be a lack of equity capital flowing into
the industry, sector, region or company that we re interested
in. Only when there is a lack of capital flowing in is the incre-
mental dollar well treated.
Thirdly, there must be inefficiencies. Only when inefficiencies
exist do you have the opportunity to create a huge wealth lift
by taking something inefficient and making it more efficient.
Those three preconditions have been met and hence we are
really excited about our position in GHL."
For its financial year 2015, GHL declared a final dividend of
0.42 cents per share. Asked about whether NCBJ was satisfied
with GHL s dividend stream Lee-Chin stated that though
important, NCBJ s focus goes well beyond GHL s current
"We are not necessarily buying GHL for the dividend stream
we see today, but we re buying it for future dividends that we
see increasing and the capital appreciation that we envisage
taking place if we are able to help GHL become better capital
allocators. We are long-term investors and our position in GHL
signifies publicly that we are here to stay for the long term."
Given the regional spread of GHL, the process of completing
the share acquisition requires regulatory approvals (and noti-
fications) across multiple jurisdictions.
Asked how far along the process had gotten Lee-Chin stated:
"The regulatory approval process is coming to an end. The pri-
mary regulators in this transaction were: the Central Bank of
T&T (CBTT) and the Bank of Jamaica (BOJ). We ve gotten
approvals from both. A lot of the smaller territories were awaiting
the approvals from the CBTT and BOJ before they gave theirs
so now we re just wrapping up the approvals from the other
Commenting on the regional nature of the transaction, and
in particular the flow of funds between Jamaica and Trinidad,
Lee-Chin noted the significance of the deal.
He said: "Historically, Trinidad and Trinidadian companies
have always invested in Jamaica but Jamaican investors, historically,
have never looked south. They ve mainly looked north. So,
hopefully this is the beginning of a new trend whereby Jamaican
investors begin to look southerly rather than northerly for invest-
NCBJ s significant shareholding in GHL places it in a unique
position to influence its operations and activities across its
portfolio of companies in the Caribbean region. Naturally, the
topic of cultural fit and cross-border management relationships
would be something that had to be addressed in the transaction.
To this Lee-Chin said: "We know and respect the management
team at GHL. We work very well together and a healthy chemistry
exists between both management teams. Both of our values are
aligned as far as growing the business is concerned so we don t
envisage any shake-ups or anything of that nature. Once a
business is growing there is no need for any shake-ups. We are
focused on helping GHL continue to grow."
Citing his experience on the acquisition of NCBJ in 2002 as
a point of reference, Lee-Chin noted that employees of GHL
should be focused on building their business. He said: "When
we acquired NCBJ the rumour was that there would be massive
job losses. We immediately sought to put those to rest as we
made it clear we were here to build a business not send anyone
"Similarly, if every employee at GHL were to ask themselves
the question: what am I doing to grow this business? we would
have to employ way more people. If every employee were, for
example, to get four new customers for GHL, business would
be bursting at the seams."
Lee-Chin noted that the size of the Caribbean region and
its relatively small populations should, in no way, limit regional
companies from having global ambitions.
"Being successful in the financial services sector isn t a
function of population base. It s a function of having big aspi-
rations, having the requisite skills, taking the requisite risks and
building a platform that you can just extrapolate from. We have
what it takes right here in the Caribbean to build a financial
institution that can be globally eminent."
NCBJ: No interest in
GHL takeover, now
Michael Lee-Chin on possible bid for 100%
The GHL-NCBJ transaction
On November 30, 2015, NCBJ, Jamaica's largest bank by
assets, consummated the acquisition of a 29.9 per cent
stake in Guardian Holdings Ltd, T&T's largest insurance
company, for an undisclosed sum. The transaction in-
volved the Lok Jack and Ahamad families selling most of
their stake in Guardian Group to NCBJ through a private
Also, selling some of its shares to NCBJ was the Inter-
national Finance Corporation (IFC), the World Bank affili-
ate that invested US$75 million in Guardian Group in
2010. The transaction also involved the Lok Jack and
Ahamad families buying back the 12 per cent stake in
GHL held by the Royal Bank of Canada (RBC) and IFC's re-
maining shares, leading to the exit from Guardian Group
of its two blue-chip foreign investors. The result would be
that NCBJ is GHL's largest single shareholder; the Lok
Jack and Ahamad families would jointly be the second
largest shareholding block with a 22 per cent stake and
both RBC and the IFC have ended their shareholding rela-
tionship with the Westmoorings-based insurance com-
If we (NCBJ) were scanning the
world and asking ourselves where
would be the best place to put the
next investment dollar, we'd put it
in a place with solid governance, a
place that we're familiar with and
understand, and a place where
there are people who we trust and
have confidence in. All those
considerations taken together make
Trinidad a fantastic place to be
investing in today.
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