Home' Trinidad and Tobago Guardian : August 6th 2016 Contents A15
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The transaction structure for the acquisition of
a stake in Guardian Holdings Limited (GHL) by
NCB Financial Group Limited (NCBGF) was
approved by the Bank of Jamaica (BOJ) and
disclosed by way of a release dated May 12. This
was revealed yesterday by National Commercial
Bank Jamaica Limited (NCBJ) after questions
were raised about the acquisition. The company
said in a media statement that NCBGF was its
nominee and affiliate to purchase a 29.99 per
cent interest in GHL from the Lok Jack Family, the
Ahamad Family and the IFC. NCBJ said at the
time of the signing of the agreement to purchase
the shares in November 2015, the structure of
the transaction had not been decided but there
had always been the possibility that the company
might appoint a nominee. NBCGF was
incorporated last April with a view that it would
eventually become a financial holding company
for NCBJ and it subsidiaries, as well as future
acquisitions. The statement continued: "The
establishment of NCBGF as a financial holding
company would follow a restructuring activity,
which commenced with a request for BOJ
approval. We are currently awaiting that approval
before proceeding with the next steps in the
process. "The fact that the restructuring is under
regulatory consideration has constrained, and
continues to constrain, our ability to give
significant details, but the BOJ hyas been kept
aware both of the structure of the GHL
transaction and the reason for the structure." The
acquisition of the GHL shares by NCBFG was
completed in May, the company said, at a price
equivalent to J$28 billion. At that time the shares
were not held directly by the Lok Jack Family,
Ahamad Family and IFC but by T&T companies
fully owned by them.
NCBJ explains GHL share acquisition
The CEO of a local securities brokerage
firm is warning that the liquidity situation
in the country could get worse when Gov-
ernment is ready to change to US1 billion
bond recently raised during a roadshow
in the United States to settle debts.
George Sheppard, of Sheppard Securities
Limited, however added that the terms of
the bond, including the "cheap" 4.5 per
cent rate, make it "a very good deal for
Commenting on the investment climate
in T&T, Sheppard said while there are
opportunities to invest locally, trends are
showing that investors are looking inter-
nationally because there are not enough
"The problem is that people, because
they have accumulated wealth, are looking
for a home to invest that wealthbecause
there is nothing available locally. There is
a tendency to look for hard currency invest-
ments---looking overseas and looking at
opportunities to invest in other currencies,"
"Most of the investment decisions are
made by institutions whether they are the
National Insurance Fund, or the mutual
funds, or pension plans, or even insurance
companies investing their funds. These
institutions are bound by limitations. They
have to invest most of their money locally,
but if you don t have the opportunity being
created then you have no opportunity to
invest. That s why you have this liquidity
situation going on," he said.
Sheppard said a recession does not pre-
vent an investor from investing and because
T&T has a certain stock of wealth that has
accumulated over the last 15 to 20 years,
"there is always going to be an appetite to
"The challenge has always been in TT
dollars, to invest in instruments that gen-
erate a good rate of return for a reasonable
amount of risk. Anytime the Government
comes with paper, investors are very keen
and interested in investing. That is going
Sheppard said the outlook is "not that
great" for stock market activity and there
is no catalyst which would change that
because there is no expectation of drastic
"You are not going to make an invest-
ment if you have little confidence on how
the economy is going to perform within
the next three to five years. That s being
played out in the local market, with the
exception of the National Gas Company
which went public last year and is doing
"You will find companies generally strug-
gling, and the financial performance of
companies hase been flat to slightly down
and its no surprise that s been happening,"
Broker warns of
President of the Petroleum Dealers Associ-
ation (PDA) Rabindranath Naraynsingh says
Energy Minister Nicole Oliverre s claim about
the number of persons interested in acquiring
petroleum dealers licenses lacks full disclosure
about the state of the retail petroleum business.
"When the minister made the statement about
people lining up for gas station licenses, she
did not give out full disclosure of all the factors
involved in operating a gas station and about
how much gas station owners actually make
and what the capital output of a gas station
owner is to earn its revenue," he said.
Naraynsingh said the gas station business
was not as profitable as it appeared on the sur-
face and the minister s statements did not factor
in the challenges facing retail gas station owners.
He said: "The gas station business is in deep
trouble. Right now it is not a lucrative business.
Lots of money can be made in the business,
but right now it is not a viable business for
many gas station owners."
Naraynsingh, giving offered a breakdown of
how revenue earned in the gas station business
was distributed, explained: "On $100 spent at
the pump, the retail gas station owner makes
about $3.95 to $4.00.
From the $3.95 to $4.00 collected the owner
has to pay business levy and Green Fund levy.
This amounts to about 80 to 90 cents.
"If someone pays with a credit card another
$1 comes out of it, so the owner is left with
roughly a little over $2 to run his operations.
From those margins he must pay his employees,
electricity and all other business expenses, so
you can see how the gas station business isn t
as profitable as it appears."
Naraynsingh said the PDA wants an oppor-
tunity to sit down and have discussions with
the minister and her team.
"We want a seat at the table and to be includ-
ed in the decision making process. The best
people to talk about the retail gas business
would be us, the petroleum dealers," he said.
Naraynsingh added that the ministry had the
power to make changes that could help boost
the retail petroleum industry.
"Right now the business is controlled by the
Petroleum Act which falls squarely under the
purview of the Ministry of Energy.
"The Ministry has the power to determine
prices and by extension margins in the retail
gas business, so all we want is to discuss the
retail business with the ministry so that when
laws and regulations are passed the dealers have
room to be part of the process."
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