Sagicor and Scotiabank Signal the Caribbean Market
The blogmaster received several messages yesterday from members of the BU family whicch highlighted two financial transactions choking local, regional and some internation newsfeeds.
The decision by Scotiabank to shed operations in nine Caribbean islands should hardly be a surprise to those who make it a business to keep ears to the ground. The region has become a hot mess regarding the state of economies and with de-risking high on the agenda of financial institutions the risk appetite of international banks operating in the region has reached an intolerable level. At some point in the future they will completely withdraw from a region to focus on bigger markets.
The acquisition of Sagicor shares by Canadian company Alignvest for 536 million dollars- reportedly to create the opportunity to efficiently raise capital by listing in a more liquid market to drive growth is the other mega transaction closed this week. The following statement by Sagicor’s Chief Operating Officer Ravi Rambarran about how regional stock exchanges operate is instructive:-
At the same time, our stock markets in the Caribbean are very thin and very illiquid. We saw just last week Friday someone sold 700 Sagicor sales out of 306.3 million shares and drove the price down to about USD1.00 That means all the other shareholders who have their stock had to value their stock at this price. That is a reflection of our stock market being very thin and very illiquid.
We look forward to a debate led by our educated class to inform a general public who are in the main disinterested and ignorant about these kinds of transaction. A shame!