Terise Kettle

‘significant growth potential’: Terise Kettle

Stockbrokerage and securities dealer Barita Investments Ltd yesterday said it had successfully financed “a landmark transaction for Jamaica and Barita”.

Majority State-owned bank, First Citizens, is the second largest shareholder in Barita, through a wholly owned subsidiary, First Citizens Investment Services Ltd. FCIS holds 90,795,154 Barita shares, which were worth J$8.61 billion or US$56.29 million. First Citizens loaned Cornerstone Financial Holdings Ltd US$25 million in September 2020.

“The transaction saw Ecommerce Property Services Ltd (Ecommerce), a Jamaican firm, acquiring three United States-based tech-driven real estate services companies.

“The larger of the three US-based companies is expected to have combined property sales exceeding US$2 billion (over J$300 billion) for the financial year 2021,” Barita said in a news release.

The three US-based companies were previously primarily owned by Robert Slack and Walters, who now (as part of the transaction) own a stake in Ecommerce.

The three companies are vertically integrated tech-based companies that each serve distinct stages of the real estate purchase/sale process:

• Robert Slack Fine Homes LLC (Robert Slack LLC)—Property Purchase/Sale Brokerage;

• Florida Funding LLC—Mortgage Brokering; and

• Florida Title LLC—Titling & Transaction Settlement ­Provider.

Robert Slack LLC is the largest of the three US-based companies.

Ecommerce was incorporated in Jamaica on October 29, 2021, according to its certificate of incorporation filed with the Companies Registry in Jamaica.

The incorporation document indicates Ecommerce had four directors as at November 15, 2021: Dennis Smith, Clifton Cameron, Trevor Patterson and James Godfrey.

Godfrey is a director and shareholder of Cornerstone Financial. He is also a director and shareholder of Barita, owning 6,734,053 shares in the company. Godfrey, as well, is a director of Productive Active Solutions, a company set up by Cornerstone founder Paul Anthony Simpson, which owns 42.91 per cent of Cornerstone.

Terise Kettle, vice-president, investment banking said this is a landmark transaction for Jamaica and Barita adding: “Across multiple fundraises, particularly our APOs, one of the key aims that we communicated to prospective investors is that we intended to further strengthen our balance sheet such that we are fully enabled to pursue a variety of financing strategies to create value and drive growth across multiple revenue lines.”

She added, “A key objective pursuant to the aforementioned strategies, as mentioned in the prospectus of our last APO, under the Use of Proceeds section, is to add capacity to our principal investment portfolios to include:

• Private equity;

• Private credit;

• Infrastructure; and

• Alternative investments

“This particular transaction highlights how we have done so by providing both quasi-equity and debt support to this private business. We successfully leveraged our balance sheet to help a Jamaican company buy three US-based companies with significant growth ­potential,” said Kettle.

Jamaica has traditionally been the home to acquisition targets (ie, foreign firms buying local companies and repatriating profits).

Kettle said, “In this transaction, Cornerstone (a locally owned company) through its subsidiary Barita Investments helped a Jamaican company (Ecommerce) to do the reverse. Now, profits from these US companies in the form of foreign currency dividend flows will be repatriated back to Jamaica for the foreseeable future.”

This transaction sees not just Jamaican financial capital being utilised to accelerate growth, but it showcases the ability of the Barita team to structure complex bespoke solutions in any market. Most importantly, the investment banking community will need to be fully attuned to executing transactions of this nature which have the potential to support/spur economic growth and development.

As a result of this transaction, all three companies are well resourced and positioned to continue and accelerate its expansion across the United States.

The financing and acquisition transaction was successfully executed by the Barita Investment Banking and Structured Finance Products teams with support from local and international service providers and professionals that carried out the due diligence (financial, commercial, information technology, tax and legal) and other professional services.

“This is just Phase 1 of the transaction, providing quasi-equity and debt financing to Ecommerce through an innovative structure called a ‘leveraged recapitalisation’,” Kettle said.

“It is anticipated that Phase 2 of this transaction will see Barita arranging the listing of the company on the Jamaica Stock Exchange, providing more investors with the opportunity to gain exposure in three of the largest and fastest growing real estate services companies in the US, and benefiting from the significant growth opportunities that will be pursued by the Ecommerce Team.”

Kettle said the transaction was has provided us with the opportunity to pursue other partnerships in the lucrative North American market “as we seek to execute our local and regional expansion strategy”.

“The innovative structure that was arranged and executed by Barita’s Investment Banking and Structured Finance teams will form the basis for similar transactions to be pursued in North America,” Kettle said.

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