Net profit up 380% for Barita Investments

BY BALFORD HENRY
Senior staff reporter
balfordh@jamaicaobserver.com

Wednesday, February 13, 2019

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“Straight out of the gate,” Barita Investments Limited (BIL) has been shouting since achieving a 380 per cent improvement in net profit, to $108.4 million, for the first quarter of the 2019 financial year.

The impressive growth has happened less than a year after being acquired by Cornerstone Investments Ltd, a Jamaican start-up founded by Paul Simpson.

Barita says its legacy as a performance leader on the Jamaica Stock Exchange (JSE) will continue, as its new management and board has further strengthened its overall positioning as an innovator and economic driver.

“We are seeking to leverage our position as the performance leader on the Jamaica Stock Exchange, to augment our capital base and strengthen our team in our drive to be a market leader in innovation and technology in the financial sector,” stated Ian McNaughton, Barita Investments' managing director.

He said that this will enable the company to provide capital, facilitate entrepreneurialism and grow wealth for its clients, as it strives to be a key player in the “Jamaican economic growth acceleration story”.

In August 2018, Cornerstone Investment Holdings acquired majority shares in Barita Investments, after raising $2 billion from an initial bond deal piloted by Sagicor Investments Limited in May, and which was completed in less than three weeks.

Following the takeover, BIL announced changes to the composition of its board of directors with former directors – Karl Lewin, Robert Anthony Jenkinson, George W Cooper and Enith Williams giving way to newcomers: Restaurants of Jamaica's Mark Myers; Cornerstone's investment banker head, Paul Simpson; Stewart's Auto Supplies' Duncan Stewart; business executive Robert Drummond; company director Phillip Lee; and S & G Road Surfacing head, James Godfrey.

The new board decided to do a refinancing of the $2-billion bond, and raised an additional $3 billion in a similar turnaround time. By December, the company raised a further $5 billion through a bond, which was oversubscribed, and also raised an additional $3 billion in equity from round-table commitments from board members of Cornerstone.

Since acquisition, the company has also recruited some top names in the business, including Jason Chambers, former vice-president of investment management at GK Capital, as chief investment officer; Robert Drummond, formerly of First Global Financial Services; Barbara Hume, former head of Antigua Commercial Bank; and Weldon Maddan, a former director and senior vice-president at CitiGroup.

They have managed to build on Barita's legacy as a performance leader on the Jamaica Stock Exchange, by strengthening the company's overall positioning as an innovator and economic driver.

Despite significant impacts in foreign currency translation totalling $179.5 million, these losses were offset by the company's double- to triple-digit growth in non-interest revenue categories, as well as a 35 per cent increase in fees and commission income over the previous year.

These gains are attributed to growth of funds under Barita's management and the strengthening of its investment banking capabilities.

Operational expenses increased due to, among other things, an increase in administrative expenses and additional staff-related costs that were incurred for organisational restructuring activities related to the acquisition. This was to be expected given the company's recent efforts to recruit industry heavyweights to its management team, a clear complement to the robust board that Simpson mobilised last year in an effort to help realise the company's long-term vision to develop, not only its own institutional strength, but also Jamaica's financial market.

“We are seeking to leverage our position as the performance leader on the Jamaica Stock Exchange to augment our capital base and strengthen our team in our drive to be a market leader in innovation and technology in the financial sector. This will enable us to provide capital, facilitate entrepreneurialism and grow wealth for our clients, as we strive to be a key player in the Jamaican economic growth acceleration story,” McNaughton says.

Shareholders' equity closed the reporting period at $3 billion, which remains relatively unchanged compared with the financial year ending 2018.

According to Barita's board chairman, Mark Myers, shareholders can continue to expect stable to improved gains in the coming quarter, even in the face of intermittent periods of exchange rate volatility and declining performance of the Jamaican dollar relative to its US counterpart.

“In light of these realities, we anticipate local equities will continue to be stimulated and provide investors with the most attractive options. We continue to diligently observe our operating environment in order to make the best use of the opportunities present and stand resolute in our mission to increase value to all our stakeholders,” he added.


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