Re­pub­lic Fi­nan­cial Hold­ings Ltd, the hold­ing com­pa­ny for Re­pub­lic Bank Ltd and many oth­er com­pa­nies, is the largest, in­dige­nous com­mer­cial bank hold­ing en­ti­ty in the Caribbean.

As at March 31, 2023, the Re­pub­lic Bank group held to­tal as­sets of US$16.90 bil­lion (TT$114.1 bil­lion).

As at March 31, 2023, the Re­pub­lic group’s mar­ket cap­i­tal­i­sa­tion was US$3.34 bil­lion (TT$22.57 bil­lion), giv­en that it was trad­ing at TT$138 per share on March 31, and its is­sued share cap­i­tal was 163,608,883

Re­pub­lic is al­so one of the most di­ver­si­fied fi­nan­cial hold­ing com­pa­nies in the re­gion, as it op­er­ates in 14 coun­tries from Cay­man Is­lands and the British Vir­gin Is­lands in the north to Guyana and Suri­name in the south. It al­so has op­er­a­tions in the West African state of Ghana.

Ac­cord­ing to the group’s 2022 an­nu­al re­port, the com­pa­ny’s Cay­man Is­lands op­er­a­tion is now its third largest source of net in­ter­est in­come and af­ter-tax prof­its af­ter T&T and the East­ern Caribbean.

The fi­nan­cial hold­ing com­pa­ny al­so re­mains one of the most prof­itable com­pa­nies in the re­gion, as its af­ter-tax prof­its for the six months end­ed March 31, 2023 to­taled US$128.07 mil­lion (TT$864.5 mil­lion). The bank’s prof­its for its 2022 fi­nan­cial year amount­ed to US$249.33 mil­lion (TT$1.68 bil­lion).

With re­gard to its own­er­ship, as at Jan­u­ary 27, 2023, the Gov­ern­ment of the Re­pub­lic of Trinidad and To­ba­go (GORTT) owned 32.68 per cent of Re­pub­lic Fi­nan­cial Hold­ings Ltd, ac­cord­ing to a ma­te­r­i­al change no­tice pub­lished by the group on Feb­ru­ary 1, 2023.

As at Jan­u­ary 27, the T&T Gov­ern­ment’s share­hold­ing in the Re­pub­lic Bank group was held 25.97 per cent by the Na­tion­al In­vest­ment Fund Hold­ing Com­pa­ny (NIF) and 6.71 per cent by Cor­po­ra­tion Sole–the en­ti­ty in­to which all as­sets of the T&T Gov­ern­ment are vest­ed and held.

The Min­is­ter of Fi­nance, cur­rent­ly MP Colm Im­bert, is the T&T Gov­ern­ment’s Cor­po­ra­tion Sole, ac­cord­ing to the Min­istry of Fi­nance (In­cor­po­ra­tion) Act. NIF is 100 per cent owned by Cor­po­ra­tion Sole.

What is NIF?

NIF, which was in­cor­po­rat­ed in May 2018 by Cor­po­ra­tion Sole and is­sued cor­po­rate as­set-backed bonds worth $4 bil­lion in Au­gust 2018, in three se­ries: Se­ries A—five years, Se­ries B—12 years and Se­ries C—20 years.

Those bonds worth $4 bil­lion were backed by shares that, at the time of is­sue, were worth $7.93 bil­lion.

NIF was in­cor­po­rat­ed “for the pur­pose of hold­ing and mon­etis­ing as­sets trans­ferred by GORTT in re­pay­ment of the debt due to GORTT by Cli­co and Cli­co In­vest­ment Bank,” ac­cord­ing to the NIF prospec­tus. Al­so in­clud­ed among the as­sets that back the NIF is 100 per cent of Trinidad Gen­er­a­tion Un­lim­it­ed (TGU), a whol­ly state-owned elec­tric­i­ty gen­er­a­tion fa­cil­i­ty lo­cat­ed in La Brea.

As such, NIF held the fol­low­ing shares, which were trans­ferred by Cli­co and Cli­co In­vest­ment Bank to re­pay debt due to GORTT:

• 42,475,362 shares of RFHL;

• 15, 285,917 shares of One Caribbean;

• ↓61,677,011 shares of An­gos­tu­ra Hold­ings Ltd; and

• 4,548,712 shares of Wit­co

Val­u­a­tion of Cor­po­ra­tion Sole’s stake in RFHL

The T&T Gov­ern­ment’s 32.68 per cent share­hold­ing in Re­pub­lic Fi­nan­cial Hold­ings Ltd makes it the sin­gle largest share­hold­er of the fi­nan­cial hold­ing com­pa­ny.

As at March 31, 2023, when the RFHL stock trad­ed at $138, the T&T Gov­ern­ment’s stake in the fi­nan­cial hold­ing group was worth US$1.09 bil­lion (TT$7.37 bil­lion).

On Tues­day, when the fi­nan­cial hold­ing group trad­ed at TT$131.67, the T&T Gov­ern­ment’s stake in RFHL was worth about US$1.04 bil­lion (TT$7.03 bil­lion). That is a de­cline of about 4.5 per cent, and is a new 52-week low for the Eng­lish-speak­ing Caribbean’s largest in­dige­nous fi­nan­cial in­sti­tu­tion. A sug­ges­tion that a friend of mine made was that the Gov­ern­ment in­tends to place some or all of its 32.68 per cent share­hold­ing in RFHL in what is be­ing called NIF2.

Speak­ing in the Sen­ate on May 2, 2023, Min­is­ter in the Min­istry of Fi­nance, Bri­an Man­ning, not­ed that the Se­ries A of the orig­i­nal NIF bonds, the five-year bond, is due to ma­ture on Au­gust 9, 2023.

In the May 4 edi­tion of the Busi­ness Guardian, in this space, Mr Man­ning was quot­ed as say­ing: “Af­ter this, NIF will launch a Se­ries D bond, us­ing ap­pro­pri­ate State as­sets, which can be con­sid­ered to be a NIF2 is­sue. The terms of the Se­ries D NIF bonds will be sim­i­lar to the orig­i­nal NIF bonds, ap­pro­pri­ate­ly ad­just­ed for cur­rent mar­ket con­di­tions.”

Mr Man­ning was, at the time, re­spond­ing to a mo­tion on the ad­journ­ment by Op­po­si­tion Sen­a­tor Wade Mark.

NIF2 and NIF Se­ries D are one and the same. At a sit­ting of the Sen­ate in late April, the Min­is­ter in the Min­istry of Fi­nance raised the pos­si­bil­i­ty that shares in Methanol Hold­ings In­ter­na­tion­al Ltd (MHIL), a hold­ing com­pa­ny for the Oman-based methanol pro­duc­er, would form part of NIF2. Cli­co owns MHIL in part­ner­ship with Switzer­land-based petro­chem­i­cal gi­ant, Pro­man.

At the April sit­ting, Mr Man­ning dis­closed that on Jan­u­ary 9, 2023, Gov­ern­ment ac­cept­ed an of­fer from Cli­co to ac­quire 19.63 per cent of its MHIL shares “as part of the re­duc­tion of the debt owed to the Gov­ern­ment of the Re­pub­lic of T&T (GORTT).”

He al­so dis­closed that on Feb­ru­ary 21, 2023, NIF ac­cept­ed an of­fer from Cli­co to ac­quire 17 per cent of its shares in MHIL.

That means Cli­co of­fered to sell a com­bined to­tal of 36.63 per cent of the shares in MHIL to NIF, which is 100 per cent owned and con­trolled by Cor­po­ra­tion Sole, and to the Gov­ern­ment, through Cor­po­ra­tion Sole.

By my es­ti­mate, the shares that Cli­co of­fered to NIF and the Gov­ern­ment are worth US$218.34 mil­lion ($1.47 bil­lion).

Mr Man­ning al­so told the Sen­ate in April: “To date, Cli­co has signed share-ac­qui­si­tion agree­ments and share trans­fer forms with the Gov­ern­ment of the Re­pub­lic of T&T and NIF, but the share reg­is­ter of MHIL has not yet been amend­ed to re­flect the trans­fers.”

The ob­vi­ous in­ter­pre­ta­tion of Mr Man­ning’s com­ment that “the share reg­is­ter of MHIL has not yet been amend­ed to re­flect the trans­fers,” is that there is a le­gal dis­pute be­tween Cli­co and Pro­man over the amend­ment of the MHIL share reg­is­ter to re­flect the trans­fer of shares to NIF and the Gov­ern­ment.

If there is a le­gal dis­pute–and nei­ther Cli­co nor Pro­man has said there is a le­gal dis­pute, to be fair–where does that leave the Gov­ern­ment’s 32.68 per cent stake in the Re­pub­lic Bank group, as­sum­ing that the Gov­ern­ment does plan to make the Re­pub­lic Bank group part of NIF2?

It leaves the whole is­sue of NIF2 in abeyance un­til the MHIL share reg­is­ter can be amend­ed to re­flect the trans­fer of shares to NIF and the Gov­ern­ment. That could take days or years, de­pend­ing on whether Pro­man de­cides to take the is­sue of the dis­po­si­tion of Cli­co’s shares in MHIL to ar­bi­tra­tion.

But the point needs to be made, once again un­for­tu­nate­ly, that the T&T Gov­ern­ment’s 32.68 per cent share­hold­ing in the Re­pub­lic Bank group would nor­mal­ly trig­ger T&T’s Take-Over Byelaws. And the Trinidad and To­ba­go Se­cu­ri­ties and Ex­change Com­mis­sion still has not re­spond­ed sub­stan­tive­ly to my query on this is­sue first made on Feb­ru­ary 1, 2023.

If the Gov­ern­ment plans to make some or all of its share­hold­ing in the Re­pub­lic Bank group part of NIF2, al­so called Se­ries D, can’t the Min­is­ter of Fi­nance just come out and say so?