After completing its most recent rounds of disposals of non-core entities, Massy Holdings Limited is channelling the funds from its divested funds portfolio into a raft of new acquisitions as part of its global expansion plans.

The Trinidadian-based conglomerate currently has three core portfolios of integrated retail, motors and machines and gas products led by executive vice-presidents David Affonso, David O’Brien and Vaughn S Martin. Massy has begun to deploy the US$271 million in proceeds back into the different portfolios with the company announcing the acquisition of Rowe’s IGA Supermarkets, Air Liquide Trinidad and Tobago Limited and IGL St Lucia Limited within the last month. These transactions are valued at a combined US$245.3 million ($37.53 billion).

Massy operates in more than 25 territories across the Caribbean and in South America and is a leader in the respective markets through the different portfolios. It’s integrated retail portfolio generated TT$7.5 billion in revenue and profit before tax (PBT) of TT$534 million for its 2022 financial year ended September 30. It contributed to 44 per cent of PBT across the group. The acquisition of Rowe’s is expected to increase PBT for the portfolio by seven per cent and one per cent to the overall group’s assets.

“Yes, definitely something we’re looking at the moment. I think what we see is an opportunity to build on that directly through that channel and may be sourced in the Caribbean, Trinidad and Jamaica some of those products to export to the [United] States as that business grows. There is a channel through the retail operation up there to channel product from the Caribbean to the supermarket shelf,” said Affonso at Massy’s 99th hybrid annual general meeting held on Wednesday at the Hilton Trinidad and Conference Centre in Port of Spain.

Affonso referenced Jamaican conglomerate GraceKennedy and their products being a key differentiator in the United States of America where Rowe’s is located. He also mentioned that the acquisition caters to the Caribbean Diaspora and persons who prefer ethnic foods. While he didn’t say there would be any change to the Massy brand regarding Rowe’s, he explained that the focus would be on building on the portfolio and the Massy’s card use across the region.

When asked about the cybersecurity risk for Massy following two cyberattacks in Trinidad and Jamaica, Group Chief Executive Officer Elliot Gervase Warner noted that the group has engaged cybersecurity firm Hitachi to guide them in improving their processes which includes penetration testing and vulnerability checks as well.

Its acquisition of Air Liquide and IGL in Trinidad and Jamaica, respectively, are expected to feed the opportunities for Massy in the liquified petroleum gas (LPG) and overall gas production space. While both acquisitions are subject to approval by the fair trading commissions in the respective territories, Massy expects Air Liquide to add 14 per cent to PBT and IGL to add 29.7 per cent to PBT. Jamaica made up six per cent of revenue and PBT for the group in 2022.

“We’re acquiring the next largest competitor in Jamaica’s LPG business. That is a significant transaction which shows our commitment to further expansion and to Jamaica, a pretty significant share of the LPG business in Jamaica. It brings significant profit into the group of companies; it gives us scale in terms of purchasing LPG around the region so that we can export and apply to our businesses we’ll be growing in Colombia and the businesses we have in Guyana,” Warner added.

The gas products portfolio experienced a 23 per cent increase in revenue to TT$1.62 billion with PBT coming in 15 per cent higher at TT$305 million. Martin explained that Massy was 75-80 per cent complete with its oxygen vaporisation unit in Jamaica which will complement the recent addition of 8,000 barrels of LPG storage at its Montego Bay facility. IGL Limited in Jamaica controls 99 per cent of the industrial gases market and the packed LPG market while Massy controls the bulk LPG market. Massy also invested in an air separation unit in Guyana to produce nitrogen, argon and oxygen.

“Motors and machines have been the pioneers of our global expansion. The work that they’ve done in Colombia and continue to do in Colombia, the expansion of our new Miami distribution centre really sets the motors and machines portfolio for even further international expansion,” Warner explained on the growth of the portfolio.

Massy is currently the largest importer of the Nissan brand throughout the Caribbean and was added as the importer for another eight territories. Motors and machines has 36 showrooms more than 33,000 vehicles sold in 2022. The portfolio also distributes Shell lubricants in 19 territories across the region and introduced the MG brand in Trinidad as well.

Motors and machines experienced a 13 per cent rise in revenue to TT$3.05 billion with PBT up 38 per cent to TT$239 million. The 91 per cent of revenue earned was derived from the Colombia and Trinidad markets. While the portfolio hasn’t executed a recent acquisition like the other two portfolios, Warner explained that they’re making good progress in exploring solid acquisition targets.

“We’re not using all the cash across the group. We judiciously apply debt on top of that to make these acquisitions. There’s still some powder left in the gun with respect to further acquisitions, but we do recognise that this is a commitment of a significant amount of the funds that we got from the divestments to new acquisitions,” said Warner on the group’s capital management.

Warner added that due to the timing of the acquisition, the proceeds from the divested funds portfolio will be used and will be partially replaced by long term debt next year. However, the group is positioning itself to utilise the Jamaica Stock Exchange (JSE) as a vehicle to fund its ambitious global plans. Warner mentioned in an investors and stockbrokers presentation on Thursday that his team would be coming to the JSE’s Regional Investments and Capital Markets Conference to meet with institutional investors.

“It is likely in the future given the success that we’re having with our business development activities that the group may need to find more capital from other sources including additional or new public offerings in different markets. It’s not something we don’t have a specific date on, but as shareholders, you can expect and anticipate that to continue to fund the growth of our portfolios, we’ll continue to seek further investments,” said Warner about the possibility of an equity raise.

Despite the company’s group’s plans, a shareholder questioned the value behind the decision to cross list on the JSE and do a 20 to 1 stock split earlier this year. Massy’s stock price is down 14 per cent on the Trinidad and Tobago Stock Exchange to TT$4.50 while its JSE price is down 35 per cent to $79.99.

“I think the jury is still out as to whether it was a good decision, but I do believe that it was the right decision to take. The amount of trading that takes place in Trinidad is quite thin. The ability of non-resident shareholders to trade in Trinidad is complex because of the lack of foreign exchange at a time when they may wish to dispose of their shares and the Jamaican market will in time give us liquidity. I think the board was right to do it. We’ll see how in the future this plays out,” said outgoing Chairman Robert Bermudez in response to the shareholder.

Massy’s asset base was down six per cent to TT$12.7 billion as different business lines were no longer recognised following the disposals in 2022. Total liabilities and equity attributable to shareholders closed the period at TT$5.45 billion and TT$7.07 billion respectively.

“So, in 2023, look out for us doing a number of things that are synonymous with Massy’s customer outreach perspective as we celebrate being 100. Celebrating 100 is more about being 100 years of contribution and 100 more years of global expansion and being the cause for good investment holding company with a Caribbean heart,” Warner closed.