In what officials of Sagicor Group Jamaica Limited, SGJL, are describing as a deconsolidation of listed real estate investment company Sagicor X Fund from the group, SGJL has sold off all its shares in the former subsidiary and given up its two board seats.
Sagicor has not disclosed the buyer or buyers of its shares nor the value of the transactions, which it said were executed in a series of transactions that were completed on Friday, September 30.
X Fund, which once controlled a number of hotels, now owns a single hospitality property – The DoubleTree Orlando hotel in Florida – having sold off most of the assets to Playa Hotels & Resorts.
The implications for Doubletree’s ownership were not immediately clear. Sagicor Group Jamaica President & CEO Christopher Zacca spoke sparingly of the transactions, explaining that he was overseas in meetings.
“After careful consideration, SGJ has decided that the deconsolidation of SREF allows SREF to better realise its potential and will help to improve shareholder value for SREF shareholders. SGJ expects the stand-alone operation of SREF to accelerate and expand its activities, as it implements its strategic priorities,” the financial conglomerate said. SREF or Sagicor Real Estate X Fund Limited trades on the Jamaica Stock Exchange under the ticker of XFUND.
The financial group said, too, that in support of the deconsolidation decision, two of its directors, Sagicor Group President & CEO Christopher and Sagicor Financial Company President & CEO Dodridge Miller, demitted office as directors on Friday. Prior to that Zacca had been replaced as chairman of X Fund by Vinay Walia on August 1, having advised the market of the pending change from late May.
In response to a Financial Gleaner request for comment, Zacca said the moves advance the independence of Sagicor X Fund.
“It is expected that the independence of X Fund will allow more rapid decision-making and the possibility to take a divergent strategic path than imagined as part of the Sagicor Group; it also frees the X Fund of any potential regulatory constraints imposed on X Fund as part of a financial group,” Zacca said via email.
No name change was announced with Sagicor’s exit from its X Fund holdings and board membership,
“Not at this time,” said Zacca. “However, this would be a matter for the new board of X Fund,” he said.
Sagicor Group had been selling down its shares in X Fund since earlier this year. By June 30, the group shareholding had declined to 12.5 per cent or 281.5 million shares from 21.1 per cent or 473.4 million shares at December 2021.
Other major shareholders include several Sagicor-managed funds, among them Sagicor Pooled Equity Fund, which held 26 per cent as at June, and Sagicor Pooled Mortgage and Real Estate Fund’s equity with a 21.8 per cent stake.
Sagicor X Fund had been the vehicle through which the Sagicor Group held its hotel assets. After selling its significant shareholding in international hotel chain Playa Hotels & Resorts last year, Jamziv MoBay Jamaica Limited, through which X Fund had held its Playa shares, was wound up earlier this year.
The Jamziv wind-up helped to wipe almost $6 billion from Sagicor X Fund’s total assets, which stood at $25.4 billion in June.
Sagicor X Fund reported improved financial performance at half-year with net profit of $110 million, a turnaround from its $47-million loss the previous year. The increased profitability was helped by a 27 per cent growth in revenue.
Despite losses in the April-June second quarter, the healthier half-year out-turn came from improved hotel business, which still accounts for a substantial portion of X Fund’s investment returns though DoubleTree Orlando hotel.