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Proven snags FGFS for $3.5b

Proven snags FGFS for $3.5b

GraceKennedy Limited has sold its investment subsidiary to Proven Investments Limited, confirming a deal that first came to light in March.

Proven has acquired 100 per cent of the shares in First Global Financial Services (FGFS) from First Global Holdings Limited (FGH) for $3.5 billion.

The deal is subject to regulatory approval and closure.

The Financial Gleaner under-stands that the acquisition includes $22 billion of balance-sheet assets and $60 billion in off-balance sheet funds under management. It also includes some real estate, but those holdings were not specified.

It’s the second such purchase for Proven after its acquisition of Guardian Asset Management Jamaica, now rebranded Proven Wealth Limited.

GraceKennedy (GK) said Proven is also to rebrand its new asset.

GK said the transaction is a share sale and will involve the transfer of all business lines. However, GK plans to hang on to FGFS’s stockbrokerage licence.

Proven Wealth already holds a brokerage licence.

GraceKennedy Group CEO Don Wehby, meantime, has signalled that new acquisitions were on the horizon.

He said the group would now shift strategic focus to the region and beyond.

Its plans include further investments to expand First Global Bank and financial services regionally.

“While acquisitions are being contemplated in North America and the Caribbean, including Jamaica, and will be an important part of our strategy going forward, given that we are a publicly listed company, we are unable to give details,” he told the Financial Gleaner.

FOCUS ON COMMERCIAL BANKING

As to why GK put up FGFS for sale, Wehby said: “While investment management does complement our financial services offering, given our long-term strategic objectives of generating a higher ROE, we felt that we should focus more specifically on our commercial banking business at this time, which would allow for allow further expansion of FGB within the Jamaican market. We are also continuing our focus on regional expansion of our financial-services arm.”

He said competitiveness in the Jamaican market was not a factor in the decision.

“GK wants to be a more focused company in commercial banking and we are also planning, subject to regulatory approval, to retain our Jamaica Stock Exchange licence and to continue in a very strategic and focused way in that business,” Wehby said.

FGFS was established in April 2004 with the rebranding of predecessor George & Branday Securities Limited. The company is in the business of securities trading, portfolio management, stockbrokerage services, structured financing, pension fund management and economic and corporate analysis.

“The decision to acquire FGFS was a strategic one and will build on the great foundation that Proven has set for itself. FGFS’ clients will continue to receive first-rate customer service,” said Christopher Williams, CEO of Proven Management Limited, in a company release.

Proven Management is the operating company for Proven Investments and its subsidiaries.

Williams told the Financial Gleaner that “key to the acquisition are the clients and the staff. They have great talent over there and with great talent you have good results.”

In an interview earlier this month, Williams said Proven was targeting both organic growth, as well as growth by mergers and acquisitions.

“We are committed to organic growth and we are doing very well,” he said.

Since entering the wealth management market segment, he said, Proven has grown its off-balance sheet business by about $20 billion.

“Our model in wealth management is pretty much off-balance sheet,” said Williams.

He then heaped praised on CEO of Proven Wealth, Chorvelle Johnson, who “has been doing a great job at positioning the brand to the high net worth boutique space,” said Williams.

“We are going to stay in that space and we are trying to find synergistic mergers to get a greater share of wallet,” he said.

MERGER LIKELY

It’s likely that Proven Wealth and the FGFS business will be merged.

FGFS President Steven Whittingham will remain in a senior position within the GraceKennedy group, but the post was not specified.

GK is a food and financial services conglomerate with tentacles reaching into the Caribbean, North America, Europe and Africa.

The conglomerate is worth $108 billion by assets and $67 billion by revenues.

Proven Investments, which was established as an asset-management company four years ago, is worth US$144 million (J$16 billion) by assets.

The company subsequently divested into real estate, through Proven REIT Limited. Proven this month lost out on a deal to acquire the Claro building in New Kingston, which was snapped up by Glen Christian.

Both Proven and FGFS are small players in a securities market of 43 licensed dealers and funds under management of $729 billion.

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