By Al Edwards, Business Co-ordinatorTHE LIKELY sale of some 80 million Life of Jamaica shares to Canadian Mutual Fund company, AIC, looks set not to be transacted through the Jamaica Stock Exchange (JSE) but may be done "under the counter," thereby undermining the JSE's call for greater transparency among listed companies.
Wednesday Business understands from a FINSAC spokes-person that the deal has yet to be completed. A spokesperson at the JSE made it clear that the sale as far as it was aware, was not being conducted through it.
In July of this year the Michael Lee Chin-led AIC acquired 200 million shares in LoJ from the holding company of Insurance Company of the West Indies (ICWI). According to ICWI chairman Dennis Lalor, the ICWI group held approximately 220 million shares in LoJ and with the sale to AIC is now left with a 40 million shareholding in the company which was acquired by Barbados Mutual in 2001.
ATTRACTIVE JEWEL
The sale of those 200 million shares was handled by Edward Gayle & Company. AIC, the parent of NCB is believed to be looking to establish a Caribbean mutual fund and LoJ would be an attractive jewel in that portfolio.
LoJ, a subsidiary of Sagicor has a shareholding of 3 billion with 2.5 billion shares on the market. Before LoJ acquired the shares of Island Life it had 1.6 billion shares on the market. If AIC successfully acquires a further 80 million shares in the life insurance giant, it will have attained a 10 per cent stake in the country's largest insurance company.
Wednesday Business under-stands that AIC offered $2.95 per share, which at the end
of trade yesterday were selling at $3.49.
DIVEST
Of particular interest is whether the Government will invoke its right to waive the 7.5 per cent transfer tax. The Government once had a 40 per cent stake in Cable & Wireless Jamaica (C&WJ) and chose to divest its stake off the JSE in a similar fashion.
A leading broker told Wednesday Business that he had a buyer that would buy the block of 80 million shares at a higher price than that offered by AIC.
Speaking to Wednesday Business last night Mayberry Investments boss Christopher Berry said: "If this transaction is done off the exchange it will seriously undermine the local capital market.
HIGH PRICE
"If the stock won't fetch a high price on the open market, then the buyer won't have to worry because it won't affect his deal. And if he loses some of the stock on the open market the Government will then get a higher price.
"I am predicting that the LoJ stock price will increase by a minimum of 20 per cent from the current price of $3.49."
LoJ is having a good year and under the management of Maxine MacLure has seen pre-tax profits of $830 million. Only last week at Mayberry's Investor's Forum, LoJ's president and CEO said: "We intend to reach a target profit of $1 billion this year. In 2001 LoJ made a profit of $232 million. Last year saw a 258 per cent increase in pre-tax profits with the company posting a figure of $830 million."
She also added that shareholders would be pleased to know that LoJ's board of directors agreed to a dividend policy of paying out 40 per cent of net income. A target return on equity of 30 per cent has been set and she believes that it will be attained this year.
Last night when contacted for a comment on the likelihood of an off the Exchange sales transaction of her company's shares, Wednesday Business was told that Ms. MacLure was at present in the Cayman Islands.
