Home' Trinidad and Tobago Guardian : June 19th 2014 Contents JUNE 2014 • WEEK THREE www.guardian.co.tt BUSINESS GUARDIAN
FEEDBACK | BG11
I read your article on the proposed allocation policy
for the Phoenix Park initial public offering, as I usually
do as I share your general interest in the development
of the stock market, particularly as it involves par-
ticipation by locals.
I am a retiree of First Citizens and was extremely
disappointed when no provision was made for an
allocation for individuals who spent the crucial years
building the bank, especially after the debacle under
which the merger was conceived.
I did not expect a discount nor even an allocation
at the level of the current staff, but I thought some
gesture of recognition was deserved, especially since
it has been now revealed that the persons who ben-
efited quite handsomely are not necessarily individuals
who were there from the earlier period.
Tears actually came to my eyes when I saw Phillip
Rochford and Osborne Nurse promoting the bank in
the video shown at the annual general meeting, real-
ising that if they had to buy shares, they would have
had to line up with the man in the street and hope
for an allocation.
I heard about the adjustment of the policy and,
at first, I was a bit envious of the Phoenix Park retirees
who obviously lobbied on the issue or whose current
staff looked after their interest. I cannot, however,
deny them the benefit principally because it was not
given to the First Citizens retirees whom you alluded
to in your article.
The Government tells us that there is no
crisis in foreign exchange because we have
US$10.3 billion in reserves and US$5billion
in the Heritage and Stabilisation Fund (HSF).
The latter is savings to both help in
smoothing the fluctuations in our energy
sector income and to create a nest egg for
future generations when the petroleum
reserves are no more.
At one time, we were being advised by the
IMF, etc, to save some of our rents from the
energy sector and create an asset whose
investment income in the future could replace
that from that sector.
If we were to only consider the income
accruing to government from that sector
(three times this amount directly accrues to
the local market from that sector) we will
need in the future some $25billion/year
income at net present value.
An investment asset which can earn this
kind of return on investment at say five per
cent per annum is somewhere like $500 bil-
lion. Hence, we would need an asset in the
vicinity of US$100billion if only to supply
the Government coffers with a similar income
as that from the energy sector.
At present, the HSF is of the order of US$5
billion, making the objective of US$100 billion
in savings in the heritage part of the fund
in this plantation almost unachievable in the
medium term. Hence, a decision has to be
made as to what are the optimum investment
opportunities for these savings in the context
of a depleting petroleum resource?
In other words, what other asset can they
purchase or help to do so, which will not
only give a return significantly greater than
five per cent, but one which will grow expo-
nentially so much so that the initial invest-
ment simply released the capacity and capa-
bility of the country onto a path of sustained
All the acclaimed economists and the expe-
riences of the currently rapid developing
countries tell us that the engine of sustainable
economic growth is the continued creation
of the specialised economic factors of which
well trained and technologically experienced
human resources are fundamental; something
that is dreadfully lacking in our country.
These specialised factors need an envi-
ronment to perform which supports knowl-
edge acquisition, its implementation in prod-
ucts and services and its creation, that is, a
national innovation system. But it is insuf-
ficient to depend on serendipity; the man in
the street coming up with a variety of dis-
connected ideas which we fund, hoping to
build new SMEs.
As Prof Anthony Clayton of UWI tells us,
we need game changers to rescue our mori-
bund national economies. We need to delib-
erately choose some emerging technologies
that can give us the basis of these game
changers; we need to build our own peer
network of university, government and indus-
try.We can, indeed, continue putting what
little is left over into the HSF, if any, and feel
a sense of comfort that we have a relatively
safe nest egg; some US$5,000 per person
As a nest egg, it is virtually useless in the
scenario of a depleting petroleum resource.
We have to at least plan on what we will
do with our heritage savings if not to restruc-
ture the economy, if not to initiate a self-
expanding economy, then what else?
Mary K King
The HSF nest egg
First Citizens IPO
who built bank
I am concerned that a
group guaranteed a cer-
tain amount of shares at
a discount is also allowed
to compete with the pub-
lic for shares. It is like
having your cake and
wanting to eat it.
This was the major
flaw in the First Citizens
IPO where individuals
were guaranteed a level
of shareholding, but no
further cap was placed
on further allocation.
I congratulate those
who thought of recog-
nising that the company
owes a small debt to
those individuals who
laid the foundation for
the current strength of
flaw in the
but no further
Links Archive June 18th 2014 June 20th 2014 Navigation Previous Page Next Page