PROVEN made exceptional gain of US$20m from sale of its AFS shares

PROVEN made exceptional gain of US$20m from sale of its AFS shares

Observer business writer

Sunday, October 13, 2019

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PROVEN Investments Limited has made an exceptional gain in excess of US$20 million from the partial sale of its shares in microfinance company, Access Financial Services (AFS).

PROVEN made this declaration in a filing last Thursday with the Jamaica Stock Exchange, where the shares in both companies are publicly traded. PROVEN sold just over 68.6 million AFS shares at a price of $32 per share through a public offer.

The offer, which opened on Thursday September 26, closed the following day, which was more than two weeks before the scheduled close on Friday October 11, given the quick take up of the shares by the market.

The trade crossed the market at $28.25 per share.

The 68.6 million shares sold represents approximately 25 per cent of the share equity in the micro finance company.

PROVEN, which was the single-largest shareholder in AFS, initially held 49.7 per cent interest but with its sale of 25 per cent share equity, PROVEN will now retain 24.7 per cent of its holding in AFS.

PROVEN's decision to partially exit AFS at this time comes after five years of solid “top” and “bottom-line” performance, which resulted in above average returns on the investment.

As a result of the sale, PROVEN has now relinquished board control. However, PROVEN has said it “remains confident in the company's ability to continue to generate sustainable returns in the future”.

PROVEN's decision to sell its 25 per cent interest in AFS is primarily due to “realise profits on its investment and raise liquidity to fund new acquisition opportunities”.

In justifying this position PROVEN indicated that “it's a private equity firm, whose primary strategy is to acquire, grow and divest businesses; therefore the sale of its shares in the company represents a natural progression in the scope of its operation as it seeks to maintain a diversified portfolio of investments. The proceeds from this sale will be used to settle a transaction relating to another portfolio investment”.

That investment, it has been reported, is the planned acquisition of more shares in Jamaica Money Market Brokers (JMMB) Group, where it acquired a 20 per cent stake for $9.2 billion last December from National Commercial Bank,to become the single-largest shareholder. PROVEN acquired 326.277 million units of JMMB Group on December 27.

JMMB Group shareholders last month approved the issue of 325 million new shares, which the financial conglomerate plans to offer to the market, pending regulatory approvals, later this year. The pricing of the shares is still to be disclosed.

JMMB's additional public offering (APO) is expected to come to the market later this month, which would result in a dilution of PROVEN's holding, unless it increased the amount of shares it holds.

Estimates indicate that PROVEN would need to inject an additional $2 billion to keep its stake undiluted in JMMB Group, assuming full take-up of the offer.

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