Mon­day’s an­nounce­ment by NCB Fi­nan­cial Group (NCBFG), Ja­maica’s pub­licly list­ed fi­nan­cial ser­vices be­he­moth, that it was giv­ing con­sid­er­a­tion to launch­ing an Ad­di­tion­al Pub­lic Of­fer­ing (APO) of up to 300 mil­lion new shares in the com­pa­ny, ini­tial­ly came as a shock to this busi­ness jour­nal­ist.

I re­ceived the no­tice post­ed by NCBFG at 4:28pm Mon­day af­ter­noon from a Ja­maican source. By 6:05pm, af­ter pon­der­ing and mulling over the im­pli­ca­tions of the no­tice, I sent the fol­low­ing mes­sage to the ex­ec­u­tive chair­man of NCBFG, who is al­so the ma­jor­i­ty share­hold­er of the com­pa­ny:

“Good af­ter­noon Mr Lee-Chin,

I am try­ing to wrap my mind around a com­pa­ny, whose share price has de­clined by more than a third, of­fer­ing 300 mil­lion new shares, which would have the im­pact of di­lut­ing all ex­ist­ing share­hold­ers, es­pe­cial­ly the ma­jor­i­ty share­hold­er…your­self.

Is the pur­pose of the APO to raise mon­ey to pay the div­i­dend ‘by the end of the year’?”

By their very na­ture, APOs of new shares in a com­pa­ny, di­lute the ex­ist­ing share­hold­ers of that com­pa­ny, if those ex­ist­ing share­hold­ers do not buy shares in the APO con­sis­tent with their in­vest­ment.

At the end of June 2023, Mr Lee-Chin was list­ed as hold­ing 1,467,645,135 shares of NCBFG’s 2,466,762,828 is­sued shares, which is equal to 59.49 per cent of the com­pa­ny.

If the NCBFG ex­ec­u­tive chair­man par­tic­i­pates in the APO of NCBFG in ac­cor­dance with his ex­ist­ing share­hold­ing in the group, and if the group is­sues 300,000,000 new shares in the APO, Mr Lee-Chin would need to ac­quire 178,470,000 new shares to en­sure he is not di­lut­ed.

On Tues­day, NCBFG trad­ed at TT$3 a share on the Trinidad and To­ba­go Stock Ex­change and at J$68.22 on the Ja­maica Stock Ex­change (JSE). Those share prices are pos­si­ble op­tions for the price of the up to 300,000,000 APO shares that are like­ly to be is­sued.

If the share prices of TT$3 and J$68.22 are used in the NCBFG APO, and if the Ja­maica-born in­vestor does not wish to be di­lut­ed, he would need to spend about US$78 mil­lion.

As re­cent­ly as June this year, Mr Lee-Chin sold 38,708,700 NCBFG shares, in or­der to raise liq­uid­i­ty to ser­vice his debt com­mit­ments, among oth­er things. That sug­gests that, un­less his fi­nan­cial for­tunes have changed since June, Mr Lee-Chin may have a some is­sues be­ing able to write a cheque for about US$78 mil­lion.

In an in­ter­view with Ja­maica’s Busi­ness Ob­serv­er on Mon­day, Lee-Chin said: “We are go­ing through the process of ne­go­ti­at­ing the price, and that ne­go­ti­a­tion will in­clude my­self as the ma­jor share­hold­er. But bear in mind that my goal is not to be di­lut­ed un­less it is ac­cre­tive. As a share­hold­er I want to make sure that what­ev­er cap­i­tal is raised min­imis­es di­lu­tion by mak­ing sure that the re­turn on the cap­i­tal far ex­ceeds the di­lu­tion...un­less we [are] not do­ing it.”

Mr Lee-Chin’s com­ment that his goal is not to be di­lut­ed in­di­cates that he in­tends to raise the mon­ey to fund his par­tic­i­pa­tion in the NCBFG APO.

How will he do that?

Bari­ta con­nec­tion?

In my view, the best peo­ple to ad­vise Mr Lee-Chin on the APO price, the tim­ing, the al­lo­ca­tion of shares, the mar­ket­ing of the APO, rais­ing the funds to ac­quire the APOshares and oth­er is­sues re­lat­ed to the ex­e­cu­tion of the of­fer, would the ex­ec­u­tives of the JSE-list­ed Bari­ta In­vest­ments Ltd and its pri­vate­ly held par­ent com­pa­ny, Cor­ner­stone Fi­nan­cial Hold­ings Ltd.

That is be­cause the mind and man­age­ment of Bari­ta and Cor­ner­stone were re­spon­si­ble for two suc­cess­ful APOs in Sep­tem­ber 2020 and Sep­tem­ber 2021.

It was the mind and man­age­ment of Bari­ta and Cor­ner­stone that con­vinced the ex­ec­u­tives of T&T’s ma­jor­i­ty state-owned Bank, First Cit­i­zens to par­tic­i­pate in Bari­ta’s first APO, through its whol­ly owned sub­sidiary, First Cit­i­zens In­vest­ment Ser­vices (FCIS).

In Sep­tem­ber 2020, FCIS made an ini­tial in­vest­ment in Bari­ta In­vest­ments in the Ja­maican com­pa­ny’s first APO of shares.

FCIS ac­quired 54,280,154 shares in the first APO, pay­ing J$52 a share, for a to­tal con­sid­er­a­tion of about J$2.82 bil­lion (US$19.5 mil­lion). That ini­tial in­vest­ment gave FCIS a 5 per cent stake in the Ja­maican com­pa­ny.

Fol­low­ing its ini­tial in­vest­ment in Bari­ta in Sep­tem­ber 2020, FCIS ac­quired a sec­ond block of 12 mil­lion shares in Bari­ta in De­cem­ber 2020, tak­ing its share­hold­ing to 66,280,154 shares, or 6.1 per cent of the Ja­maican com­pa­ny. FCIS ac­quired the sec­ond block of Bari­ta shares on De­cem­ber 4, 2020, at a price of Ja$90 a share for a to­tal con­sid­er­a­tion of ap­prox­i­mate­ly Ja$1.08 bil­lion (US$7.2 mil­lion).

FCIS al­so par­tic­i­pat­ed in Bari­ta’s sec­ond APO, which took its in­vest­ment in the fi­nan­cial ser­vices com­pa­ny to 7.43 per cent, mak­ing the T&T fi­nan­cial ser­vices com­pa­ny the sec­ond largest share­hold­er of Bari­ta.

Apart from its share­hold­ing in Bari­ta through FCIS, First Cit­i­zens Bank has lent Cor­ner­stone Fi­nan­cial some US$60.1 mil­lion, ac­cord­ing to Cor­ner­stone’s 2022 fi­nan­cial au­dit.

Asked in a What­sApp mes­sage on Wednes­day morn­ing whether Bari­ta In­vest­ment and Cor­ner­stone Fi­nan­cial are go­ing to be in­volved in the APO, Mr Lee-Chin re­spond­ed: “Yes.” He did not re­spond to a ques­tion ask­ing him to con­firm that Bari­ta In­vest­ments and Cor­ner­stone would be in­volved in the APO.

Asked to com­ment on the af­fir­ma­tive re­sponse of the NCBFG ex­ec­u­tive chair­man, Paul Simp­son said: “Bari­ta and Cor­ner­stone wel­come any op­por­tu­ni­ty, if asked to part­ner with an au­gust in­sti­tu­tion such as NCBFG to cre­ate val­ue for the av­er­age Ja­maican, Trinida­di­an and Caribbean peo­ple.

“Mr Lee-Chin’s sto­ry rep­re­sents the em­bod­i­ment of un­lim­it­ed po­ten­tial of every sin­gle Caribbean grass­roots per­son.

Simp­son is the founder of Cor­ner­stone, which is the largest share­hold­er of Bari­ta In­vest­ments with about a 75 per cent stake.

His­to­ry of as­so­ci­a­tion

Mr Lee-Chin has a long his­to­ry of as­so­ci­a­tion with Bari­ta In­vest­ments.

In a video in­ter­view for the on­line se­ries, ‘Bari­ta On The Go,’ post­ed on May 21, 2019, Raul Pin­nock, the man­ag­er of in­vest­ment bank­ing and in­vestor re­la­tions at the Ja­maican fi­nan­cial ser­vices com­pa­ny, which was found­ed in 1977, asks Mr Lee-Chin if he was one of Bari­ta’s first in­vestors.

His re­sponse: “I was in­vest­ing about 28 or 30 years ago.”

In the sec­ond part of the in­ter­view, post­ed on Sep­tem­ber 27, 2019, Mr Pin­nock starts off by mak­ing this point: “You have pro­vid­ed a bit of men­tor­ship/ad­vice for our deputy chair­man, Paul Simp­son. I imag­ine you proud to see your prin­ci­ples put in­to prac­tice.”

Mr Lee-Chin’s re­sponse was: “Yes.”

In the list of the top 100 share­hold­ers of BIL for Oc­to­ber 2020, Mr Lee-Chin comes in at #44 with 951,111 shares. The BIL top 100 share­hold­ers for No­vem­ber 2020 lists him as own­ing 899,377 shares in the fi­nan­cial ser­vices com­pa­ny, which is a pub­lic com­pa­ny list­ed on the Ja­maica Stock Ex­change.

Re­ports out of Ja­maica al­so state that Bari­ta/Cor­ner­stone ac­quired the 38.7 mil­lion shares that Mr Lee-Chin sold in June 2023 in two blocks.

A sub­sidiary of Bari­ta In­vest­ments, MJR Re­al Es­tate Hold­ings Ltd, al­so ac­quired Reg­gae Beach, St Mary, from Michael Lee-Chin. That 250-acre prop­er­ty was re­port­ed­ly val­ued at US$50 mil­lion.

NCBFG is al­so the ma­jor­i­ty share­hold­er of Guardian Hold­ings Ltd.