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BY AL EDWARDS
Wednesday, January 27, 2010
THE investment company, Proven Investments, spearheaded by Peter Bunting, Gary Sinclair, Mark Golding and Christopher Williams, has already secured commitments from investors in excess of the US$20 million ($1.78 billion) it is seeking from a private placement which opens today.
The private placement will be conducted on a first-come, first-serve basis with it scheduled to close on Febuary 5, however, the directors reserve the right to close the offer as they see fit.
In this file photo (from left) Proven CEO Christopher Williams, Peter Bunting, Mark Golding and Gary Sinclair.
Peter Bunting (left) leads a discussion among members of the Proven team. From second left, Gary Sinclair, Chris Williams and Mark Golding.
In this file photo (from left) Proven CEO Christopher Williams, Peter Bunting, Mark Golding and Gary Sinclair. 1/2
Speaking with the Business Observer yesterday, Peter Bunting said: "Based on indications from investors the take-up is expected to be very positive indeed. We are very encouraged that sophisticated investors see the value proposition in our model and they realise that the traditional retail type operation that has been prevalent in Jamaica for so long will now have to change."
The CEO of Proven Investments, Christopher Williams, added that verbal commitments are already in excess of US$20 million.
"It will be one of the largest private placements in Jamaica's history. The main principals have put up 30 per cent of the targeted capital and together with what we raise from shareholders, Proven will be a strong capitalised company, with tax efficiencies that will prove advantageous to shareholders. It also has a strong management team which is the best in the business," said Williams.
Seventeen years ago Dehring Bunting & Golding (DB&G) was borne from a change in market conditions which saw a number of securities dealers come to prominence. The company was started with US$1.5 million and sold for US$100 million to the Scotia Group with the largest beneficiaries of that deal being the major shareholders of DB&G.
What its lead principals have prided themselves on is timing and spotting opportunities surmising that over time, equity investments outweigh those of fixed income and this forms the basis for its new model, Proven.
The Jamaican Government is in the process of securing US$1.3 billion from the International Monetary Fund (IMF) via a standby-arrangement over two years. A major linchpin of this is a debt exchange programme which will see interest rates come down to 12.25 per cent per year which will in effect bring down the yield curve seeing fixed-income investment rates close to historical lows.
The Financial Services Commission (FSC) has stepped out and declared that the repo business is an area it is targeting as an investment strategy that should not be so dominant in the future.
So the business model Proven is proposing is timely.
"The Proven model is built around growing shareholder value. It will be a closed door operation as opposed to the more front office establishments that prevail in Jamaica. Securities dealers have primarily made money from the efficient utilisation of their capital with the expense line driven by the front door.
Proven focuses exclusively on the top revenue item which is the utilisation of capital and eliminates the largest cost which is the front office. Setting up in St Lucia means we have an efficient tax structure. So given the changes in the environment, the business model is perfectly timed. A focus on shareholders is the only way to go with interest rates at an all-time low. Taking an equity bet right now is the one of the few ways an investor is going to beat inflation and get a real return. So our timing has once again proven to be exceptional," said Williams.
One concern raised is that DB&G benefited tremendously from Dr Omar Davies' largesse as the then minister of finance and that now in opposition that will no longer prove to be the case and so those deals will no longer be forth coming. How does Proven view this?
"When you look at DB&G's income over the years, it was not based on private deals. In fact it made money from publicly traded securities. There was no huge benefit from being a part of the 'inner sanctum' if you look at the numbers. It did well from the efficient management of its capital. Those deals you speak of account for no more than perhaps ten per cent of gross income. What is being demonstrated is proven timing.
" In 1992/93 we timed it well when the market turned toward securities dealers and we timed it well again when the market is turning away from that form of trading. Proven will be the Caribbean's first investment company," added Williams.
Proven's CEO is keen to make a distinction between an investment company which is the model favoured by his company, and an investment management company.
The former exists solely for the benefit of its shareholders by generating and maximising returns for them. The latter is a venture that builds out a service to offer to clients to provide them with an investment management function. In other words, it goes out, finds clients, brings them through the door and then manages their money for them for a fee.
Another worry is that the likes of Bunting, Golding, Bicknell and Sinclair though they have injected capital, the sums are hardly anything to write home about. Shouldn't they have funded this venture by themselves without having to look to other shareholders?
"The principals have put up serious money and that cannot be questioned. It is a private matter and so the individual sums cannot be disclosed but I can tell you it is 30 per cent of capital. What Proven is bringing to the table is a new business model, very efficiently structured, good capital and it will be one of the largest private placements ever seen in Jamaica," said Williams.
There are potential investors who are in a quandary as to how much to invest in Proven. During these times investors want to remain liquid in order to snap up deals as they become available and are reticent about being weighted too heavily in any one asset class.
To qualify as a shareholder in Proven, one must be able to prove that one has net assets of $50 million; earned more than $10 million per year over the last two years; and be able to cut a cheque for $10 million for the private placement.
"It's a personal decision just how much an investor wants to put into Proven. It is an equity investment and we are not telling anybody just how much they should be investing with us.
We do not recommend that an individual shifts too aggressively the balance of their portfolio. At the end of the day one still has to be a prudent investor, you can't throw all your eggs into one basket," said the ebullient CEO.
Bunting added: "Although we have targeted US$20 million, once we have reached that number we won't be necessarily turning back potential investors. We do not need anywhere near say US$100 million. We intend to optimise the portfolio then launch a rights issue in around six to nine months time. Down the road they may be subsequent tranches which investors can get into.
"Proven is coming in with a clean balance sheet. Whatever most Jamaican investors had before has been marked down significantly. Our presence couldn't be more timely. We are cutting costs with a small specialist team that is looking to maximise shareholder value.
"Everybody is coming in at book, that is US ten cents per share, so there is no premium for the IPO."
Traditionally Jamaican securities dealers tend to rely on carry-trade and spreads and have done well with these strategies. Proven will engaging in four strategies to boost shareholder returns namely, carry-trade, trading, arbitrage and private equity/financial engineering. Proven is looking to employ a low-cost structure bolstered by strong capital injection
http://www.jamaicaobserver.com/busin...n-Milo_7362426
Wednesday, January 27, 2010
THE investment company, Proven Investments, spearheaded by Peter Bunting, Gary Sinclair, Mark Golding and Christopher Williams, has already secured commitments from investors in excess of the US$20 million ($1.78 billion) it is seeking from a private placement which opens today.
The private placement will be conducted on a first-come, first-serve basis with it scheduled to close on Febuary 5, however, the directors reserve the right to close the offer as they see fit.
In this file photo (from left) Proven CEO Christopher Williams, Peter Bunting, Mark Golding and Gary Sinclair.
Peter Bunting (left) leads a discussion among members of the Proven team. From second left, Gary Sinclair, Chris Williams and Mark Golding.
In this file photo (from left) Proven CEO Christopher Williams, Peter Bunting, Mark Golding and Gary Sinclair. 1/2
Speaking with the Business Observer yesterday, Peter Bunting said: "Based on indications from investors the take-up is expected to be very positive indeed. We are very encouraged that sophisticated investors see the value proposition in our model and they realise that the traditional retail type operation that has been prevalent in Jamaica for so long will now have to change."
The CEO of Proven Investments, Christopher Williams, added that verbal commitments are already in excess of US$20 million.
"It will be one of the largest private placements in Jamaica's history. The main principals have put up 30 per cent of the targeted capital and together with what we raise from shareholders, Proven will be a strong capitalised company, with tax efficiencies that will prove advantageous to shareholders. It also has a strong management team which is the best in the business," said Williams.
Seventeen years ago Dehring Bunting & Golding (DB&G) was borne from a change in market conditions which saw a number of securities dealers come to prominence. The company was started with US$1.5 million and sold for US$100 million to the Scotia Group with the largest beneficiaries of that deal being the major shareholders of DB&G.
What its lead principals have prided themselves on is timing and spotting opportunities surmising that over time, equity investments outweigh those of fixed income and this forms the basis for its new model, Proven.
The Jamaican Government is in the process of securing US$1.3 billion from the International Monetary Fund (IMF) via a standby-arrangement over two years. A major linchpin of this is a debt exchange programme which will see interest rates come down to 12.25 per cent per year which will in effect bring down the yield curve seeing fixed-income investment rates close to historical lows.
The Financial Services Commission (FSC) has stepped out and declared that the repo business is an area it is targeting as an investment strategy that should not be so dominant in the future.
So the business model Proven is proposing is timely.
"The Proven model is built around growing shareholder value. It will be a closed door operation as opposed to the more front office establishments that prevail in Jamaica. Securities dealers have primarily made money from the efficient utilisation of their capital with the expense line driven by the front door.
Proven focuses exclusively on the top revenue item which is the utilisation of capital and eliminates the largest cost which is the front office. Setting up in St Lucia means we have an efficient tax structure. So given the changes in the environment, the business model is perfectly timed. A focus on shareholders is the only way to go with interest rates at an all-time low. Taking an equity bet right now is the one of the few ways an investor is going to beat inflation and get a real return. So our timing has once again proven to be exceptional," said Williams.
One concern raised is that DB&G benefited tremendously from Dr Omar Davies' largesse as the then minister of finance and that now in opposition that will no longer prove to be the case and so those deals will no longer be forth coming. How does Proven view this?
"When you look at DB&G's income over the years, it was not based on private deals. In fact it made money from publicly traded securities. There was no huge benefit from being a part of the 'inner sanctum' if you look at the numbers. It did well from the efficient management of its capital. Those deals you speak of account for no more than perhaps ten per cent of gross income. What is being demonstrated is proven timing.
" In 1992/93 we timed it well when the market turned toward securities dealers and we timed it well again when the market is turning away from that form of trading. Proven will be the Caribbean's first investment company," added Williams.
Proven's CEO is keen to make a distinction between an investment company which is the model favoured by his company, and an investment management company.
The former exists solely for the benefit of its shareholders by generating and maximising returns for them. The latter is a venture that builds out a service to offer to clients to provide them with an investment management function. In other words, it goes out, finds clients, brings them through the door and then manages their money for them for a fee.
Another worry is that the likes of Bunting, Golding, Bicknell and Sinclair though they have injected capital, the sums are hardly anything to write home about. Shouldn't they have funded this venture by themselves without having to look to other shareholders?
"The principals have put up serious money and that cannot be questioned. It is a private matter and so the individual sums cannot be disclosed but I can tell you it is 30 per cent of capital. What Proven is bringing to the table is a new business model, very efficiently structured, good capital and it will be one of the largest private placements ever seen in Jamaica," said Williams.
There are potential investors who are in a quandary as to how much to invest in Proven. During these times investors want to remain liquid in order to snap up deals as they become available and are reticent about being weighted too heavily in any one asset class.
To qualify as a shareholder in Proven, one must be able to prove that one has net assets of $50 million; earned more than $10 million per year over the last two years; and be able to cut a cheque for $10 million for the private placement.
"It's a personal decision just how much an investor wants to put into Proven. It is an equity investment and we are not telling anybody just how much they should be investing with us.
We do not recommend that an individual shifts too aggressively the balance of their portfolio. At the end of the day one still has to be a prudent investor, you can't throw all your eggs into one basket," said the ebullient CEO.
Bunting added: "Although we have targeted US$20 million, once we have reached that number we won't be necessarily turning back potential investors. We do not need anywhere near say US$100 million. We intend to optimise the portfolio then launch a rights issue in around six to nine months time. Down the road they may be subsequent tranches which investors can get into.
"Proven is coming in with a clean balance sheet. Whatever most Jamaican investors had before has been marked down significantly. Our presence couldn't be more timely. We are cutting costs with a small specialist team that is looking to maximise shareholder value.
"Everybody is coming in at book, that is US ten cents per share, so there is no premium for the IPO."
Traditionally Jamaican securities dealers tend to rely on carry-trade and spreads and have done well with these strategies. Proven will engaging in four strategies to boost shareholder returns namely, carry-trade, trading, arbitrage and private equity/financial engineering. Proven is looking to employ a low-cost structure bolstered by strong capital injection
http://www.jamaicaobserver.com/busin...n-Milo_7362426
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