By Al Edwards, Business Co-ordinator
Duncan
JAMAICA PRODUCERS and National Commercial Bank have sold the 207 million shares they hold in local money market operator Jamaica Money Market Brokers (JMMB) for approximately, J$1 billion.
The sale took place on Friday afternoon and both parties are understood to have made healthy profits from the transaction.
JMMB was established in 1992 and founded by Joan Duncan as a joint venture with the National Development Bank, Mutual Security Bank, Jamaica Producers, Jamaica Venture Fund (JVF) and Antrim Ltd. JVF holds a 25 per cent stake in JMMB, and Dr. Noel Lyon, JVF's managing director also serves as chairman of JMMB. In an effort to prevent the Government holding an interest in JMMB, the company's managing director, Mrs. Duncan-Scott, acquired the NIBJ's 30 per cent stake in Jamaica Venture Fund.
NCB, a 12 per cent share holder in JMMB only recently expressed an interest in increasing its stake in the company that recently went public. Former managing director, Christopher Lowe said in July of last year: "We are currently trying to maximise the value of our investments and we have indicated that if there is a market for JMMB shares we would indeed be interested. JMMB is a very good company and it comes as no surprise that parties that have made an investment in it would be looking to maximise on such an investment."
So why did NCB dispose of its shares in JMMB?
At current prices it may well have seen an opportunity to seek a healthy return on assets not deemed to be core business. It seems unlikely that it will in the immediate future acquire an even bigger stake in the family run company and the strategy appears to be to focus on retail banking and return OMNI to an insurance powerhouse. Its stock broking arm, Edward Gayle and Company, is expected to offer services similar to JMMB sometime this year. It is believed that NCB sold its shares to a "regional company".
Many banks are experiencing liquidity problems largely as a result of the Bank of Jamaica's decision to impose a five per cent special deposit on financial institutions to prevent the local dollar sliding even further. Commenting on this move by the BoJ, NCB's general manager for treasury and correspondent banking Doug Peebles said, "we will be required to deposit five per cent over and above the nine per cent we already deposit and that will come at a cost to us."
However, a spokesperson at NCB saw the matter as simply a case that "NCB has taken the decision to realign its portfolio and the bank is looking at different issues."
JMMB was initially capitalised at $17 million in 1992, with Jamaica Producers holding 106 million shares and NCB 177 million shares. Before JMMB went public, Jamaica Producers held 7.27 per cent of the company.
Speaking to Wednesday Business last night, Jamaica Producer's chief operating officer, Peter Morris said, "We were approached by a broker who offered us an attractive price and so we sold 70 million shares "at market value." We still hold 13 million shares in JMMB and we are looking to make an attractive return on our investment."
A source close to both deals said: "With a weighted average of $4.35, Jamaica Producers sold 70 million shares at approximately $4.70 and NCB sold 130 million shares at $4.15.
In December of last year, JMMB went public looking to raise $900 million with a little over 234 million of its 1.4 billion shares being offered at $4.15 per stock unit. Almost 144.6 million of the shares are being underwritten by Clico Investment Bank of Trinidad and Tobago which comes to $600 million.
