Barita scales new heights in 2020
Cornerstone subsidiary gears up for bigger 2021Sunday, November 22, 2020
BY DAVID ROSE
Less than two years after being acquired for $3.1 billion by the Paul Simpson-led Cornerstone United Jamaica Holdings, Barita Investments Limited has made significant strides in the local financial space as they concluded their 2020 financial year (FY) with a $70.5-billion balance sheet and $2.73 billion in net profit.
The brokerage firm, which has had its roots firmly planted for more than 40 years, has become a trendsetter and game changer as they grew total assets by 377 per cent over the last 5 years through $23.7 billion in fresh equity and repurchase agreements to move into new areas.
These moves include the company's expansive marketing and social media push with a 70 per cent lead conversion, 5 and 5.49 per cent stakes in Proven Investments and Pulse Investments Limited, respectively, and further support for diversification of their revenue base.
For the 2020 FY ending September 30, Barita grew their net interest income, fees and commission income and foreign exchange gains by substantial double digits with their dividend and other income being slightly down for a 29 per cent increase in net operating revenue.
This was in an environment where half of its FY was caught in the novel coronavirus pandemic which saw asset prices collapse globally with the Caribbean region still struggling to recover some of those valuations.
However, Barita's conservative strategy ahead of the pandemic with 36 per cent of their assets in March being cash allowed them to rebalance and seize opportunities in the depressed environment.
Although the company incurred 32 per cent more in expenses for the FY at $2.01 billion, the 54 per cent growth in net profit against a prior period of $1.71 billion balanced out the growth in expenses.
This is a massive change from 2016 when Barita's net profit was at $207.2 million and total assets at $14.77 billion. Shareholders equity grew by 103 per cent to $27.72 billion for the FY.
Barita also paid a substantial $1.83 billion dividend to shareholders in October which was the single largest payout and was greater than the combined payout over the last 5 years.
The additional public offering (APO) in September saw Trinidadian First Citizens Investments Services take a 5 per cent stake in the growing firm. When combined with St Lucian IBC 294 Inc and Cornerstone, these 3 shareholders acquired 91 per cent of the 260,599,830 shares which were on offer with Cornerstone's acquiring 172.3 million shares ($8.96 billion) or 66 per cent of the shares.
This augured well for regular shareholders who benefited from Barita's 81 per cent price rise for September to $95.87, 35 per cent growth for 2020 and 965 per cent increase since Cornerstone's takeover.
Barita is currently building out its new Knutsford Boulevard location with the new Montego Bay office being the next area of focus from the $4.26 billion raised from the APO. The group's investment banking division has begun to see significant uptick in business with $1.5 billion from the APO being a critical tool in supporting its planned expansion. Barita has also been on an aggressive talent hunt across the financial sector to build up its new strategic divisions as seen by some of the new staff additions after the FY's conclusion.
“In spite of the uncertainty surrounding the market environment, Barita was able to successfully close its oversubscribed APO, raising $13.5 billion in September.
”Our focus over the immediate term will be to optimally allocate the proceeds raised by the APO towards continuing the realisation of the group's transformational growth strategy. We continue to remain cautious but optimistic about the prospects for several aspects of our operations as we look ahead to our 2020/2021 financial year,” chairman Mark Myers said in his report to shareholders about the company's success in the APO and plans for the 2021 FY.