Business

Commonwealth buying local merchant bank

BY CAMILO THAME Business co-ordinator thamec@jamaicaobserver.com

Wednesday, July 30, 2014    

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NEW York-based Commonwealth Partners (CWP) has inked a deal to buy a majority stake in local merchant bank, MF&G Trust Finance Limited.

The recently formed private equity firm, which is led by former Financial Services Commission head Rohan Barnett, will acquire the shares from Merban Limited and Levas Limited through its subsidiary, United Commonwealth Partners Jamaica Limited.

The agreement is subject to Bank of Jamaica approval, while the purchase price was not disclosed. But the deal is expected to result in additional capital for the local merchant bank and the expansion of its market reach internationally.

According to central bank data, MF&G Trust had a loan book valued at over $830 million, total assets just shy of $2 billion and a capital base of $168 million at the end of March.

CWP recently pulled together US$30 million ($3.4 billion) in funding from a number of Jamaican investors, including Mark Myers of Restaurants of Jamaica; Duncan Stewart of Stewart's Auto Sales; Nigel Chen See of National Supply; James Godfrey of PAVECON and S&G Limestone; and Phillip Lee of Labels and Boxes Limited and Rotoflex Jamaica.

The investment house's focus will be on acquisition of hard assets both in the Caribbean and the US, as well as developing an investment portfolio targeted at highly rated emerging market opportunities.

They have already secured deals with an existing broker dealer outfit in New York and a Cayman-based pension fund administrator.

The strategic alliance with the Cayman Fund administrator gives Commonwealth a customer base and a platform which spreads into several Caribbean markets, while the stake in MF&G Trust should give the Cayman entity a toehold in the fund administration business in Jamaica.

Tying them all back to the brokerage in the US positions Commonwealth as an integrated financial services platform which gives investors in the Caribbean and among its diaspora direct access to the global capital markets, while enabling them to increase their participation in capital market opportunities back in the region.

"The opportunity to combine our expertise in financial services with an extremely well-established and respected financial institution will no doubt allow us to provide best-in-class financial products and services to the market," said Barnett, managing partner of CWP. "MFG Trust's solid history in merchant banking makes the firm an important contributor to business in Jamaica, and a significant bridgehead for managing opportunities throughout the Caribbean."

Over the years, the owners of the local merchant bank received many overtures from a number of suitors, according to Norman Minott.

"However, CWP offered to participate in a long-term strategy that will grow the bank and increase the ways in which we will be able to meet the needs of our clients," said the partner at Myers, Fletcher and Gordon, and director of MF&G Trust. "CWP's investment in MF&G Trust is expected to result in an increase in the bank's overall financing activities and the portfolio of services available to MF&G Trust clients.

"With CWP as our strategic partner, we believe there is significant opportunity to accelerate the expansion of the bank, making us well-placed to provide the kind of innovation and leadership required for global finance today."

Incorporated in 1969 as Solnar Limited, MF&G Trust is today a full-suite merchant bank offering loan and lease financing, as well as foreign exchange trading to individual and corporate clients.

After getting regulatory approval, the merchant bank's name will be changed.

The MF&G building in downtown Kingston.

Commonwelth Partners (CWP) executives Paul Simpson (left), parnter; and Rohan Barnett, managing partner and chairman, on the floor of the New York Stock Exchange. New York-based CWP has signed a deal to buy a majority stake in local merchant bank, MF&G Trust Finance Limited.

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