Proven Investments signed an agreement to acquire a 50.5 percent controlling interest in Roberts Manufacturing Company, a Barbados based company, Proven announced this past week.
The agreement is for the purchase of shares from Massy Properties (Barbados) for US$21,452,500. “The consideration includes real estate for US$1,452,500, with the rate of return on the investment put at 15 percent based on the purchase price,” Christopher Williams, CEO of Proven, advised ICInsidier.com.
“Closing is scheduled to take place 3 business days following the receipt of all regulatory and governmental confirmations, approvals, and acknowledgments, save that the closing date may not be extended beyond 30 days,” Proven further advised.
“RMCL produces a variety of margarine, shortening, soyabean oils and animal feed products, which are distributed to over 15 markets regionally and internationally.
“The proposed acquisition is one of three that Proven has been negotiating,” Williams advised ICInsidier.com. One is said to be a financial institution in the Cayman Islands that is subject to regulatory approval and will result in the group owning two companies in that country with the 100 percent owned International Financial Planning (Cayman) Limited. The other business under consideration is in the business of property rental.
“The acquisition of the majority shareholding of RMCL is aligned with PROVEN’s strategy to grow through acquisition in the real sector throughout the Caribbean and Latin American regions with a view to create value to its shareholders.” the Proven release stated.
Christopher Williams, Proven Investments CEO.
RMCL has Ansa Mc Al as the minority shareholder who manages the operations. Proven decided to invest in the manufacturing operations due to the high rate of returns on investments. Management is already in place running it and the appeal of the products to a wide cross section of customers regionally and in developed countries.
Proven generated profit attributable to shareholders of US$29.98 million for the financial year to March 2020 and is boosted by US$25 million in gains from the sale of part of their investments in Access Financial Services. The company suffered losses of nearly US$18 million on other investments and ended the year with a total comprehensive profit of US$18 million.
For the September quarter, Proven generated profits of US$3.4 million and US$4.8 million for the six months. That should compute to around 1.5 US cents per share for the year, but Williams expects this to jump to 24 US cents per share in 2022. Whether that target is achieved or not is unsure at this stage, but what is known is that the last capital raise was not all fully utilized as expansion plans slowed and would have generated a lower rate of return than if they were used in the acquisition of profitable ventures. In addition, the latest announced acquisition will add around US$3 million to annual profit or about 4 cents per share and push Earnings per share within the 20 cents range. The investment market recovered from the collapse in the March quarter and resulted in total comprehensive profit of US$17 million for the September quarter and US$27 million for the half year, thus reversing the 2020 losses in the investment market.
Proven Investments traded the most shares on the market.
To assist in funding acquisitions and ensuring adequate liquidity, the company has offered for sale 89,416,037 new ordinary shares to existing shareholders and the public. The company has the option to upsize the issue to a maximum of 134,124,037 shares to raise a maximum of US$30 million, assuming the Invitation is fully upsized. If fully upsized, the total number of shares in issue will be 759.43 million units.
The price to be paid per share by Existing Shareholders is 22.50 US cents or J$32.80, Key Investors 22 US cents or J$32.10 and others 23 US cents or J$33.50. All the prices are below existing market prices of 25.69 US cents and J$35.79 in the Jamaican segment of the Jamaica Stock Exchange. Acquisitions in the financial sector will provide the opportunity for cross selling products and services to clients in each company, as well as provide the opportunity for some amount of cost reduction as certain administrative and other costs can be shared within the group.
The Directors anticipate that not less than 50 percent of the Company’s annual after-tax profits will be distributed as dividends, subject to the requirement for re-investment of its profits to finance potential growth and to ensure sustained development, as well as due compliance with the solvency and liquidity criteria set by the Company’s Investment Policies.
The official closing date for the offer is January 29, 2021.
