FOLLOWING the exodus of Alliance Financial Services Limited (AFSL) from the bill payment space in December 2021, the remittance and cambio company is now seeking to re-enter that market as it builds out its presence across Jamaica.

AFSL was acquired in April 2022 by Sagicor Group Jamaica Limited (SJ) after the company was suspended by the Bank of Jamaica (BOJ) related to charges against its then principal shareholders. This resulted in utility providers such as the National Water Commission (NWC) and the Jamaica Public Service Company Limited (JPS) no longer authorising the company to collect bill payments, with contracts cancelled due to the situation arising.

Sagicor Group is now seeking to re-establish Alliance’s market position in 2023 and benefit from the growth of the new business segment through digital transformation.

“As we look forward to 2023 AFSL will embark on an aggressive growth strategy which should see an increase in our cCambio and remittance locations islandwide. Additionally, AFSL will re-enter the bill payment market with the intention of becoming an instant payment provider for all utility companies and for our own Sagicor Life Jamaica,” read the Sagicor Group 2022 annual report.

The BOJ’s 2022 annual report stated that there were 20 million bill payment transactions, a 15 per cent increase compared to 2021, with the value transacted amounting to $516.6 billion, an 18 per cent increase. Debit cards accounted for 46 per cent of the transaction volume and 68 per cent of the transaction value.

The major bill payment providers include GraceKennedy Payment Services Limited (Bill Express), Paymaster (Jamaica) Limited, and Prime Trust Financial Limited (Quick & EZ Bill Pay).

Alliance’s business prior to the acquisition also included card services which involved the issuance of a prepaid MasterCard and co-branded cards with different entities such as Lasco Financial Services Limited, Mailpac Group Limited and The Jamaica Civil Service Association.

However, it was revoked from the BOJ’s fintech regulatory sandbox in December 2021, which eliminated it from the prepaid card market as well. While it hasn’t listed any intention to return to that market, Sagicor Group is looking to develop new products which will complement its commercial banking arm, Sagicor Bank Jamaica Limited.

“The acquisition of AFSL was also significant as it aligned with SGJ’s overall strategy for growth, leading the way for new business segments and expanding product offerings to clients. Additionally, the completed transaction also ramped up Sagicor’s plans to develop products around prepaid cards and digital wallets,” the report added.

While Alliance Financial contributed $697.36 million in revenue and $68.74 million in net profit to Sagicor Group’s earnings for the nine months of 2022, Alliance recorded a net loss of $1.59 billion in the first quarter (January to March) of 2022. In the company’s December 2020 prospectus Alliance had earned $1.47 billion in revenue and $709.30 million in net profit for its 2020 financial year (October 2019 to September 2020). Thus, that one-quarter suspension by the BOJ erased all profits it had earned in 2019 and 2020.

Alliance had estimated that it had processed 30 per cent of all inbound MoneyGram transactions, had an average 9.92 per cent market share of the cambio market between July 2015 to June 2020, and its remittance market share was 8.4 per cent between April to September 2020.

Sagicor Group paid $3.27 billion between a cash and contingent consideration for Allaince Financial, with SJ booking $116.72 million in other income relating to the conditional payment for AFSL in 2022. A total of $2.67 billion was acquired in goodwill for Alliance Financial relative to the net assets acquired of $606.26 million. Alliance contributed $769 million in cambio and remittance fees, according to the annual report.

“In 2022 we welcomed the newest member to our financial conglomerate — Alliance Financial Services Limited (AFSL). I am happy to report that AFSL has been seamlessly integrated into the corporate structure. This acquisition has further strengthened our position in the foreign exchange market while providing additional distribution points for financial services,” the SJ report said on the prospects for Alliance.

According to a January 2022 Supreme Court of Jamaica case ruling in favour of the BOJ, Alliance stated that it had over 40 branches and 77 sub-agent locations. Many of the sub-agents were significantly impacted from the first-quarter shutdown of Alliance as they lost customer traffic and revenue from being the outlets which process customer transactions.

Since the acquisition, Alliance formed a partnership with Unicomer Jamaica in August 2022 to allow MoneyGram customers to pick up their money transfers at any of the 28 Courts stores across the country. Sagicor noted that this partnership effectively expanded the agent network by almost 50 per cent.

“After joining the SGJ family some 50 sub-agents of AFSL from across the island were feted to a special brunch event at the Terra Nova All-Suites Hotel in Kingston which allowed executives and team members of Sagicor and Alliance to become acquainted,” Sagicor Group noted in its dedicated Alliance page in the annual report.

With Omar Brown now at the helm leading Alliance, 2023 will be an interesting year for the business which has adopted a black colour scheme for its logo. A promissory note section in the annual report says that Alliance was in breach of its maximum debt to EBITDA (earnings before interest, tax, depreciation and amortization) ratio of 5.5 times. No penalties were incurred for this breach.

“With Alliance’s growth mindset and Sagicor’s resources and dominance in the financial services space there is no doubt that the group will continue to strengthen and improve its services islandwide as they chart a new course to success,” the report stated.

Alliance Investment business acquired

In August 2022 it was stated that Sagicor Investments Jamaica Limited had completed the acquisition of Alliance Investment Management Limited’s securities dealer book of business for $21.59 million in net assets.

However, the annual report instead stated, “In August the business successfully completed the acquisition of the assets and liabilities of Alliance Investment Management Limited, leading to further expansion of the client base and assets under management.”

Alliance Investment had a plea and case management hearing last July during which Peter and Robert Chin appeared on the company’s behalf. Alliance Investment is still listed as a securities dealer on the Financial Services Commission’s website, but executive consultant Colando Hutchinson left the company last September and moved to Sterling Asset Management Limited as it launched an investment banking arm.