Sagicor Group Jamaica Limited has offloaded its remaining 20.75 per cent stake in Sagicor Real Estate X Fund Limited as it charts a new path in a rising interest rate environment.
The disclosure was announced on the Jamaica Stock Exchange (JSE) last Friday which was accompanied by the notice that Sagicor Jamaica president and Chief Executive Officer (CEO) Christopher Zacca and Sagicor Financial Company Limited president and CEO Dodridge Miller had resigned as directors of X Fund effective September 30. This leaves recently appointed Chairman Vinay Walia, Stephen McNamara, Peter W Pearson, Bruce RV James, Colin Steele and Carlton Barclay as the remaining directors of X Fund. Brenda-Lee Martin is the CEO of X Fund.
"After careful consideration, Sagicor Group Jamaica has decided that the deconsolidation of Sagicor Real Estate Fund allows [it] to better realise its potential and will help to improve value for Sagicor Real Estate Fund shareholders. Sagicor Group Jamaica expects the stand-alone operation of Sagicor Real Estate Fund to accelerate and expand its activities, as it implements its strategic priorities," the JSE disclosure said.
Sagicor Group Jamaica had initially disposed of 191,913,423 shares at $8.35 for a consideration of $1.60 billion over six trades on March 24. This equated to 8.56 per cent of X Fund and left Sagicor Group Jamaica holding 12.55 per cent while Sagicor Life Jamaica trading a/c â€” Sagicor Real Estate Fund owning 8.09 per cent. This resulted in Sagicor Group Jamaica recognising a gain of US$0.8 million on the sale.
Sagicor Pooled Equity Fund purchased 7,202,309 shares, Sagicor Pooled Diversified Investment Fund purchased 95,703,267 and Sigma Diversified Investor purchased 32,245,522 shares. Sigma Equity's stake went up by 45,691,313 shares in the first quarter.
Sagicor Group Jamaica then sold its remaining 281,500,577 shares on August 19 over six trades at $8.35 for a consideration of $2.35 billion. The largest block of shares was 145,295,556 shares. Sagicor Life Jamaica sold its 181,499,136 shares at $8.24 on September 30 for a consideration of $1.50 billion.
This leaves Sagicor Group Jamaica with $2.35 billion at the company level and $3.85 billion at a group level in cash.
Sagicor Group Jamaica executed the first sale a day after the Bank of Jamaica deemed Alliance Financial Services Limited (AFSL) fit and proper. The AFSL acquisition had an initial $2.60 billion cash consideration and a contingent payment of $3.4 billion related to specified performance criteria for the new subsidiary.
Sagicor Investments Jamaica Limited also completed the acquisition of Alliance Investment Management Limited's securities dealer book in mid-August.
Zacca told sharehokders at X Fund's annual geneal meeting in May that the focus would be on creating a more independent governance structure for 2022 as part of the growth strategy for the company.
X Fund raised $1.49 billion its initial public offering and listed on the JSE in November 2013. Sagicor Group Jamaica initially acquired a 21.11 per cent stake in X Fund at $6.95 for a consideration of $3.29 billion in X Fund's September 2015 rights issue. Sagicor Group Jamaica recognised it as an associate after the rights issue and consolidated it as a subsidiary in October 2018.
Sagicor Group Jamaica's disposal of X Fund comes at a time when rising interest rates led to $13.84 billion in unrealised losses on its bonds held through other comprehensive income and a $2.22 billion realised and unrealised loss for the first half of 2022. This disposal means that only the 40 per cent non-controlling interest in Advantage General Insurance Company and 30 per cent non-controlling interest in Bailey Williams Limited will be represented on the group's consolidated income statement. Sagicor Group Jamaica's 2020 consolidated net profit was dragged to $4.48 billion due to X Fund recording a $15.39 billion consolidated net loss in that same year due to its exposure to Playa Hotels and Resorts. Sagicor Group Jamaica's net profit attributable to shareholders is up 25 per cent to $6.04 billion for the six months period.
X Fund is in the process of winding up Jamziv Mobay Jamaica Portfolio Limited which it currently controls 60.81 per cent of across the group. X Fund's DoubleTree resort in Orlando has seen occupancy bounce back from 13 per cent to 94 per cent as of June. X Fund's total revenue has increased by 27 per cent to $3.42 billion for the first half of 2022 with the net loss attributable to shareholders of $47.39 million turning to a net profit attributable to shareholders of $110.16 million.
X Fund's total assets stand at $25.37 billion including cash resources of $2.83 billion. Total liabilities and equity attributable to shareholders are $8.87 billion and $16.50 billion respectively. X Fund's stock price is down three per cent year to date at $8.24 for a market capitalisation of $18.48 billion.