NCB Financial Group Limited (NCBFG) has entered into a share purchase agreement to sell 30.20 per cent of its ownership in Bermuda-based Clarien Group Limited to Cornerstone Financial Holdings Limited (CFHL), its second divestment announcement this year.

The sale is set to reduce NCBFG’s stake from 50.10 per cent to 19.90 per cent in Clarien Group, which is the parent company of Clarien Bank Limited, a Bermudan bank involved in community banking, investment management and trust administration. The deal would represent CFHL’s first international acquisition following its 75 per cent acquisition of Barita Investments Limited for $3.08 billion in August 2018.

“NCB Financial Group Limited’s decision to sell its controlling interest in Clarien Group is a strategic move aligned with our ongoing efforts to reallocate capital effectively. We are pleased to remain a shareholder with a 19.90 per cent stake in Clarien Group Limited, and we look forward to continuing our collaboration with existing shareholder Edmund Gibbons Limited (EGL), while anticipating new majority shareholder, Cornerstone who will hold approximately 70.10 per cent,” shared Robert Almeida, CEO of NCBFG, from the press release.

NCBFG’s 2023 audited financials revealed that Clarien Group grew revenue by 23 per cent to $13.79 billion and effectively doubled net profit from $867.60 million to $1.72 billion. This meant that Clarien would have contributed $1.72 billion out of $15.34 billion in consolidated net profit for the NCB Financial Group.

Clarien’s net assets also improved 14 per cent to $16.97 billion with cash and cash equivalents at $20.01 billion. NCBFG’s carrying value for Clarien at the end of September 2023 was $9.98 billion. The subsidiary is yet to pay a dividend since being acquired. Clarien Bank’s board is chaired by Almeida with NCB Jamaica directors Bruce Bowen and Sandra Glasgow also on the 10-member board. Ian Truran is the CEO of Clarien Bank.

“We presented 2024 to 2026 to the board of directors of Clarien and the financial forecast for that same period was presented and was approved, and it does incorporate a dividend payout ratio of an approved level to maintain its growth aspirations, demonstrate financial resilience, and provide a return on investment to shareholders,” said Clarien Bank CEO Ian Truran at NCBFG’s February 9 AGM

NCBFG acquired its original stake in December 2017 for $4.15 billion which resulted in it recording a gain of $4.39 billion from the transaction. NCBFG’s 2018 audited financials stated, “An offer was made to discount to book value after taking into account the Bermudan economy, the company’s loan portfolio, real estate market and additional capital requirements imposed by the Bermudan Monetary Authority.”

The NCBFG acquisition also coincided with Portland Private Equity Limited acquiring 17.92 per cent in Clarien Group. Portland’s website states that the Clarien Group stake was acquired for US$10 million under Portland Caribbean Fund II. Edmund Gibbons Limited retained a 31.98 per cent stake in Clarien Group.

According to the disclosure, NCBFG would provide transition support after the sale to Cornerstone through its subsidiaries. It was also stated that the reduced interest wouldn’t have a material impact to future earnings or the asset base of NCBFG after the sale. If NCBFG maintains significant influence on Clarien’s board after the sale, it could still be considered an associate company rather than just a regular investment.

The announcement of the Clarien sale comes a week after NCBFG closed its additional public offering, which brought in $2.5 billion compared to the $5.097 billion it had set for its initial target. NCBFG, the standalone holding company, has $36.84 billion in current debt that matures between October 2023 to September 2024.

Although the sale price nor additional details were added in the release, NCBFG’s subsidiary NCB Global Holdings had sold 451,612 shares (0.195 per cent) of Guardian Holdings Limited (GHL) in June 2021 for $746.96. This left its interest in GHL at 61.77 per cent.

NCBFG had announced in February that it was selling NCB (Cayman) Limited, a class A bank in the Cayman Islands, to Berkeley Financial Holdings Limited. NCB Cayman had US$252.44 million (J$38.89 billion) in total assets and US$64.16 million (J$9.88 billion) in equity/capital as at September 30, 2023. Its net profit decreased 44 per cent from US$7.22 million to US$4.07 million (J$627.18 million) according to its pillar 3 reports. NCBFG extracted $5.41 billion from NCB (Cayman) in its first quarter.

Cornerstone Financial Holding and Cornerstone United Holdings Jamaica Limited are holding companies that own Barita Investments and Cornerstone Trust & Merchant Bank Limited. The Jamaican financial subsidiaries are set to be reorganised under a financial holding company called Barita Financial Group Limited at a later date. Both firms are the brainchild of founder and CEO Paul Simpson.

While both companies are private, Cornerstone Financial recently received a Caricris rating of CariBBB+ and CariBBB recently with the notes highlighting Productive Active Solutions Limited being the largest shareholder with a 42.2 per cent. Cornerstone Financial was noted to have had a 56 per cent dip in total income to US$41.30 million with net profit declining by 65 per cent to US$26.39 million in its September 2022 financial year.

However, Cornerstone Financial’s total assets were up 12 per cent to US$778.66 million with the tangible net worth improving six per cent to US$480.31 million. Cornerstone’s debt pile jumped by 106 per cent from US$104.25 million to US$215.68 million which also resulted in debt to total assets moving to 27.7 per cent. Cornerstone Financial’s main asset is its Barita shares which are accounted for using the share price rather than through the consolidation method on its financial statements. Cornerstone Financial held 919,404,592 ordinary shares or 75.3371 per cent of Barita Investments up to March 31.

Cornerstone Financial was seeking US$12 million (J$1.86 billion) and $2 billion (US$12.74 million) in debt financing during February to secure further investments which included acquisitions. Cornerstone Financial received a $1.50 billion (US$9.69 billion) dividend from Barita on February 2. Cornerstone Merchant Bank was recently searching for a supervisor for fintech business operations.

NCBFG chairman and majority shareholder Michael Lee-Chin is the godfather of Simpson’s daughter. MJR Real Estate Holdings Limited, a Barita managed asset, purchased the 250-acre Reggae Beach in St Mary from Lee-Chin in May 2022. Lee-Chin’s AIC Holdings Limited also sold 22.71 million NCBFG shares in June 2023 to 294 Inc, a company connected to Simpson, and 16 million NCBFG shares to Barita Investments in June 2023.

NCBFG’s stock price bounced up three per cent on Thursday to $59.47 following Wednesday’s dip where the stock traded at an intraday low of $56. NCBFG’s JSE price is down 10 per cent in 2024, which leaves it with a market capitalisation of $151.38 billion. The Trinidad & Tobago Stock Exchange price bounced up 12 per cent on Thursday to TT$3.10 (J$70.93) which leaves it down nine per cent in 2023.