NCB Capital Markets' two latest acquisitions will cost the company just over US$36 million ($3.3 billion) when the deals are finalised.
The investment bank plans to pay US$34 million for a 96 per cent stake in general insurer, Advantage General Insurance (AGI), and TT$15 million ($220 million) for Trinidadian-based AIC Finance.
Both companies are being bought from NCB Capital Markets' ultimate parent, AIC (Barbados).
The independent valuation for AGI valued the amount at approximately the proposed acquisition price, according to filings with the US-based Securities and Exchange Commission (SEC), while the valuation for AIC Finance placed the purchase price below the value of the company.
Indeed, AGI was sitting on $2.6 billion in equity at the end of 2011, and the company has been profitable over the last five years — it accumulated just under $2 billion in net profit between 2007 and 2011.
On the other hand, AIC Finance recorded a TT$2.9-million ($41.8-million) pre-tax loss in the year ended September 30, 2010, which was smaller than the TT$47-million loss the company posted the year before, according to the last published financial statements.
The two years of losses were primarily as a result of losses on disposal and revaluation of assets in 2009, and impairment on the goodwill on AIC Securities in 2010.
But they appeared to have turned a small amount of retained earnings into a TT$46-million deficit, even though the company's capital stood at TT$24 million at the end of 2010.
The current financial position of the Trinidadian merchant bank has not been disclosed, but Steven Gooden, deputy CEO of NCB Capital Markets, placed the company's assets at TT$130 million, down from TT$140 million at the end of 2010.
Importantly, the acquisition gives the banking group — National Commercial Bank — a toehold in the Trinidadian market, and the eastern Caribbean by extension.
The completion of the transactions is subject to regulatory approval.
The latest acquisitions, which began in 2012, follows the $2.2-billion purchase of a 29.3 per cent stake in Jamaica Money Market Brokers (JMMB) in August 2011.
Those shares were later acquired by the NCB in November 2011, and represented a smaller stake — 26.3 per cent — of JMMB after new shares were issued as part of the transaction costs related to the 100 per cent buyout of Capital and Credit Financial Group last July.