Gary Peart: Mayberry's wealth creator
Business Leader: Executive Steward NOMINEE #7
Today the Jamaica Observer publishes the seventh of 12 stories on the nominees for this year's Business Leader Award being held under the theme “Business Leader: Executive Steward”. The nominees are among the top CEOs in Jamaica.
Gary Peart got news that the Supreme Court was siding with Pfizer in its calculation of the amount of money that the pharmaceutical behemoth would have pay to Lasco Distributors Ltd, just moments before his Business Leader interview.
Lasco had prevailed at the Privy Council and the case that had meandered through the court system for a decade-and-a-half was bounced back to the local jurisdiction for determination of damages.
The Jamaican company had submitted a stupendous compensation demand — US$480 million by one account. But the October 29 ruling threatened to hand it a pyrrhic victory.
Peart was deeply invested in the case because Mayberry Investments, of which he is chief executive officer, is a shareholder in Lasco Distributors. A ruling anywhere close to the magnitude that the local company had sought would in turn give Mayberry a claim on the windfall and buoy its profit and share price.
It was a tense moment for the Mayberry CEO as, cellphone glued to one ear, he agonisingly processed the news being communicated to him by a representative he had dispatched to the Supreme Court.
“They are going with Pfizer,” he muttered sotto voce, unable to hide his sense of despondency.
There was a ray of hope because the judge had asked both sides to prepare briefs to later defend or oppose the US$500,000 proposed payout to Lasco as compensation for the many years it was barred by Pfizer from selling in Jamaica a generic version of a drug over which the pharmaceutical giant claimed proprietary rights.
Peart was obviously disappointed by the decision, but remarkably appeared to quickly shake it off and settle down for his photo shoot and interview; for such is the nature of the business in which Mayberry is engaged.
Over the 32 years of its operation, Mayberry Investments has evolved from a stock brokerage to a multifaceted financial services outfit offering investment banking services, debt and equity restructuring, stock brokerage, investment management, and financial advice.
Its holding — though fairly modest — in Lasco Distributors and its 21 per cent stake in its sister company Lasco Financials provided a convenient inflection point for our drill down into the pioneering role that Peart and his team have played in helping to reshape important aspects of the country's commercial sector.
“Our ability to be nimble and innovative has allowed us to build and maintain a competitive advantage in the marketplace,” he remarks. “Our strength has been relationship-building in line with our motto. This is one of the main reasons that the company consistently wins and executes large mandates.”
Nowhere has this corporate mantra played out with greater efficacy than at the junior stock exchange.
The junior market was conceived by the Jamaica Stock Exchange and shepherded into existence in 2010 by an assemblage of private/public sector stakeholders.
But it remained an abstract innovation until Mayberry Investments, whose CEO was also a part of the founding committee, went into high gear.
Peart and his team — not the least of which was Chris Berry, the company's executive chairman and principal shareholder — set about to leverage relationships they had built, in some instances over decades, to breathe life into the nascent junior market.
Their first target was perhaps their easiest. In 2006 Mayberry took a huge but minority stake in Access Financials, a small-loans business founded by Marcus James. Mayberry's capital helped to reshape Access' balance sheet and enhance its attractiveness for public listing. Access was the first company to test the promise of the junior market in 2010. Others followed in quick succession — Blue Power Ltd, Jamaican Teas, and three companies owned by entrepreneur and the year 2000 Business Leader Lascelles Chin: Lasco Financials, Lasco Distributors and Lasco Manufacturing.
In short, Mayberry alone now accounts for 17, or more than half, of the 32 companies that have made it to the junior exchange in the seven years of its existence.
“We have been able to diversify the type of companies on the market, from tourism to bakery, to shipping, distribution and manufacturing,” says Peart.
Mayberry has charted two pathways to achieve its prolific track record for public listing. As was demonstrated in the case of Access, it invests in private firms, helps them to grow and then takes them to the market. The other approach is to stake out a position in the enterprise at the point of listing as has been the case with most of the companies it has helped to make public.
This represents an invaluable market-building function that borders on public service and for which Mayberry can rightly take some credit, so much so that it is commonly referred to as the go-to brokerage for entrepreneurs seeking to take their companies to the exchange.
“Our investment banking team is now known for executing successful IPOs, and is the number one broker in trading on the junior market,” says Peart. “This is all in keeping with our win-win-win philosophy, where the owners, investors, as well as our economy benefit significantly from the companies we have brought to the market.”
But public listing is also a judicious investment strategy that dovetails with the brokerage's long-term mission of growth through acquisitions and stakeholdings in private and public organisations.
“Under my leadership, Mayberry introduced the private equity business model to our industry,” the CEO stresses.
Access Financials is the archetypal case that demonstrates the spectacular results that this approach to doing business can and has in fact produced for Mayberry.
The brokerage invested $38 million in the small-loans outfit in 2006, and four years later shepherded it to the junior market. In 2015 it offloaded its stake to Proven for $900 million. “This gain allowed us to invest in four separate operations and we have doubled our returns in that time,” Peart lets on.
There is an art to convincing Jamaicans who build their enterprise from scratch and who remain deeply attached to them, to share ownership and control with the public. It is an arduous and complex undertaking that has become a permanent work-in-progress at Mayberry.
In one instance, it took five years for Peart and his team to convince an entrepreneur to make the leap to the exchange.
“Apart from the tax incentives, one of the arguments we use to convince them is that if an entrepreneur has a business that has grown but which he can't sell, it will die,” says Peart. “When you list, you can live off the dividends, attract capital easily and grow exponentially. You can use the shares to borrow money.”
Mayberry's role in the development of the junior market is now well documented. What is less known is how Peart himself, wearing a double hat, helped convince then Finance Minister Audley Shaw to remove the taxes from bonds during the Bruce Golding Administration.
“As president of the Jamaica Securities Dealers' Association, I led the effort to remove transfer tax and stamp duty from bonds, which would help propel bond trading into a now multi-billion-dollar industry,” he explains. “We have grown the business from zero. Improved bond trading opened the door for securities dealers to issue bonds as an alternative to funding via loans, allowing them to effectively compete with commercial banks, which has helped to reduce cost of loans to the public.”
This year alone, Mayberry is on track to raise $10 billion in bonds on behalf of clients.
Yet this company was in the news more recently after having raised $6.6 billion through a combination of debt and equity to enable its clients to purchase a huge chunk of Supreme Ventures Ltd. While it was the ensuing boardroom drama that led to the resignation of Supreme's chairman Paul Hoo that made the headlines, the underlying fact remains that this was another example of Mayberry's capacity for transformational deal-making.
The Supreme transaction bore some of the signatures of an earlier acquisition of another iconic Jamaican company — Lascelles — by the Trinidad-based CLICO, a deal that was facilitated by Mayberry.
“This was the largest transaction in which we were involved,” notes Peart. “It was a US billion-dollar deal for which we were the stockbrokers. We had to convince stockholders to sell the shares. It was hard work to explain the transaction to them.”
Peart also pointed to the acquisition of furniture retailer Courts a few years ago, and Mayberry's role as a brokerage as another example of his company's ability to execute big transactions in the local marketplace.
The quality of the executive team, the clear sense of mission and the motivation provided to the 103-strong workforce were cited by the CEO as the key ingredients to the unlocking of his organisation's potential that has been on display.
“I am the CEO and on a daily basis my main role is to drive revenue-generation, which is done personally as well as by motivating my team to identify and execute opportunities,” he says.
“One of the most important elements I think I've brought with me to Mayberry,” he continues, “is the spirit of employee empowerment, particularly among my managers. I've made it a point to hire managers with an entrepreneurial spirit, and ask that they take ownership of their respective departments in a way that gives them a sense of achievement while also contributing to the company's development and bottom line. So that whilst we function as a team overall, my department leaders run their respective units at a level of efficiency that can only propel us forward.”
The process of bringing big projects to fruition is ground up, even if the idea germinates at the very top of the organisation. “Once an opportunity arises,” he explains, “proper research is first conducted... then presented to a subcommittee of the board for approval, then the board for final and ultimate approval.”
Given that Berry, the chairman, and his brother Mark both have executive roles at Mayberry, as well as a constant presence at the workplace, it is not surprising that Peart has cultivated what he describes as a “very constructive relationship” with the family.
“I would say the rapport we have has led us to achieve great things together for the company,” he emphasises. “Whilst my reporting relationship with the chairman is very professional, we also share a bond that resembles that of a family member. On a daily basis we speak five to six times and that shows how strong our communication is.”
An interesting approach that Mayberry has adopted for the past 20 years to uplift public understanding of issues related to the markets is its monthly investor forums.
“I was able to build on an already strong programme by inviting not only local industry experts on business and finance but also overseas experts who brought a global perspective to our audiences,” says Peart, who has been with the organisation since 2005. “I also enlisted the forums as a tool for employee development by giving members of the team opportunities to showcase their selling pitches, public speaking and networking abilities.”
Peart says that, going forward, his vision for Mayberry is of an institution that will “continue transforming the lives of those we work alongside and those we do business with: we will continue to build wealth for our clients and to develop our employees both personally and professionally”.
That vision was put into motion once again just this week with the announcement that Mayberry's associate company — Lasco Financials — on whose board both Peart and Berry sit, had acquired CreditScotia, doubling its operational size in one fell swoop.
“This is an opportunity to grow by acquisition,” Peart remarks.
At its last year-end, Mayberry reported assets of $21.8 billion, equity of $7.2 billion and net realised profit for the year of $172 million.
— Moses Jackson is the founder of the Business Leader Award programme and chairman of the Award Selection Committee. He may be reached at email@example.com
— Freelance journalist Nazma Muller contributed to this story.