7 months ago
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Cornerstone has given its financial holding company a rough valuation of $38.5 billion in capital to 2023, documents released this week indicate.
The financial holding company will combine the capital of Barita Investments, Barita Unit Trust, and Cornerstone Trust and Merchant Bank (CTMB). The financials indicate that the entity would become about 10 per cent larger than Barita on its own up to 2023.
The reorganisation will “strengthen the group’s ability to identify attractive strategic opportunities for acquisition, enhance its commercial value, engender greater operational efficiency”, according to Chairman Mark Myers in the preface of the Cornerstone Scheme Booklet which outlines the process of the reorganisation both from a financial and legal perspective. It was released earlier in the week.
The Financial Gleaner sought responses from management to print on its 2024 estimated size. Under the scheme, the company will seek approval from Barita shareholders at an extraordinary general meeting on January 20, 2025. Upon approval, the matter will go to the Supreme Court on March 18 for final authorisation. The group estimates an April timeline for the completion of the reorganisation.
The scheme will have no adverse effect on the Cornerstone and Barita Investment shareholders, stated management in the Cornerstone Scheme Booklet released on Monday. Barita shares will be delisted and replaced by Barita Financial Group Ltd (BFGL) the new financial holding company, whose assets include CTMB, Bartia, and Bartia Unit Trust.
“The Barita shareholders, save for CFHL, will continue to hold their shares in Barita, which will remain listed on the Jamaica Stock Exchange, and so no value will leave shares held by the Barita minority shareholders, both before and after the reorganisation,” stated the booklet about BFGL.
CFHL, or Cornerstone Financial Holding Ltd, will become the ultimate holding company of the group after the reorganisation. The group currently has two holding entities, Cornerstone Financial Holdings Limited Barbados (CFHL), and Cornerstone United Holding Ltd Jamaica (CUHJ). After the reorganisation, only one holding company will exist, that of CFHL Barbados, which will hold all other entities, including CUHJ, CFHL-USA, and BFGL.
“CFHL assumes the business of CUHJ and becomes the ultimate holding company,” stated the booklet which latter added. “The proposed financial holding company BFGL will reflect the assets of both Barita and CTMB.”
Chairman Myers stated that the reorganisation will align the group with the Banking Act, which requires a single holding entity for deposit-taking institutions.
“The primary purpose of the schemes of arrangement is to facilitate the reorganisation of the regulated companies, within the group under one holding company,” stated Myers.
The scheme document doesn’t have any projections for the group for 2024 or 2025. Rather, it showed total assets to June 2023 at $129.2 billion for BFGL. The assets of Barita alone stood at $128.2 billion up to September 2023 and grew to $142.8 billion in September 2024, the financials indicated. From a capital perspective, BFGL stood at $38.5 billion in June 2023, compared to Barita’s capital at $35.4 billion in September 2023.
CEO Paul Simpson started Cornerstone less than a decade ago with shareholders who are leaders in business, including Chairman Myers who operates the KFC fast-food franchise under Restaurants of Jamaica Ltd.
The BFGL’s combined assets equate to 14 per cent of the assets held by all securities dealers in Jamaica. Up to June, the sector held $957 billion in total assets, up from $910 billion a year earlier, according to the latest data from the Financial Services Commission.
Cornerstone operates a merchant bank regulated by the Bank of Jamaica. However, it does not operate a commercial bank or insurance company, making comparisons with other financial groups slightly challenging. The reorganisation would result in Cornerstone becoming a large-listed institution, though still behind securities dealers such as the JMMB Group, which also owns a commercial bank. JMMB holds assets of $700 billion and $58 billion in capital as of September 2024. Owning a commercial bank places an entity in a different category, alongside players holding $2.5 trillion in total assets, led by NCB Financial, Sagicor Financial, and Scotia Group.
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