The landmark deal that closes a 178-year-old chapter as one of the Caribbean’s oldest companies is being pitched as the result of “courtship” to grow operations, profit greater benefit to shareholders.
A new entity, to be named New Sagicor, will be listed on the Toronto Stock Exchange (TSX), when acquired by Canadian special purpose vehicle, replacing Alignvest, which currently has about US$400 million listed on that exchange but no operation.
Group Chief Operating Officer for Sagicor Financial Corporation Ravi Rambarran, in a telephone interview with Barbados TODAY from Jamaica on Wednesday, a day after the company announced the proposed deal, outlined further details.
On Tuesday the company announced that Alignvest would acquire all the shares of Sagicor by way of a scheme of arrangement under the laws of Bermuda, at a price of US$1.75 per share with an aggregate value of US$536million.
Rambarran said the proposed deal came about after just over two years of courtship between the two firms, who over the past year, have been carrying out their due diligence.
“They approached us, we did not approach them, but both parties over that 30-month period of courtship, we have reached a level of comfort that we believe there is a fit,” he said.
“I am very confident that this is a good deal for our shareholders . . . We see this as a really a win-win on both sides. In fact, this is a mark of confidence in the Caribbean by a group of sophisticated high-net worth individuals and sophisticated institutions and investors,” he added.
Rambarran said the deal meant that Sagicor was now in a position to raise capital to fund its future growth, instead of borrowing to do so.
When New Sagicor is created and listed on the TSX, Sagicor would delist from the London, Barbados, Jamaica and Trinidad & Tobago stock exchanges, as an insurance company that began life in 1840 as the Barbados Mutual Life Assurance Society.
“Why would we do that? It is because we have found that so far we have funded our growth through borrowing or our internal resources. We have not been able to use our stock,” said Rambarran.
“What it means for the company is the ability to use capital that we would like to raise from the TSX to fund our growth. It is our ability to partner with a group of very reputable professions with very strong financial acumen and relationship in the Canadian marketplace to strengthen our governance structure and bring the benefit of those relationships to our shareholders,” he said.
The senior insurance executive explained that the Caribbean markets were far too illiquid and was not providing the equity that the company needed to growth at this time.
“Our view is that our Caribbean markets have not recognized our value. Our performance has been consistently improving in terms of our book value, but we believe the market has not recognized that.
“At the same time, our stock markets in the Caribbean are very thin and very illiquid. We saw just last week Friday someone sold 700 Sagicor sales out of 306.3 million shares and drove the price down to about US$1. That means all the other shareholders who have their stock had to value their stock at this price. That is a reflection of our stock market being very thin and very illiquid,” he explained.
In order for the deal to go through, Bermudan law requires a quorum of 100 shareholders to vote, either in person of proxy, and a 75 per cent majority of that quorum will have to approve.