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Financial News

Nov 2009 Financial News

Barita to list

Nov 27, 2009

After over 32 years in the business, Barita Investments is finally going public. The announcement was made on Wednesday at a Press Conference held at
the Courtleigh Auditorium, New Kingston.

Barita's lead principal, Rita Humphries-Lewin said the Initial Public Offering (IPO) is being done not only to list Barita as a public company on the Junior Jamaica Stock Exchange, but to ensure "transparency of operations, which will offer more confidence and security to clients. It will also ensure succession planning, and allow us to take advantage of the prospects of greater expansion of the operations of
the company."

Barita, the oldest stock broking firm in Jamaica, will make available, come December 7, 2009, 200 million ordinary shares, 100 million redeemable preference shares and 100 million convertible preference shares which will be converted to ordinary shares in November 2012. The shares are estimated to cost J$2.50 per share for the ordinary stock and J$3.00 per share for preference shares.

"It is not a large issue because the market is not very large right now, but we want to be public and that is the reason why we are doing it," Humphries-Lewin said.
"Immediately, we are putting together an Independent Retirement Scheme and we are looking at the expansion of our international market trading. We already have two mutual funds as well as overseas funds and we are looking to expand on these products," she added.

On the issue of succession planning, Humphries-Lewin said that it was prudent for the continuity of the business to take the company public and step aside at least as General Manager. "Family companies have a less chance of survival than public companies," she said. "It is therefore important that if you really want the company to be successful you have to go public." She pointed to the strong management team that Barita currently has, including the new General Manager Ian McNaughton, who has been with the company for two years.

"It is my intention to retain the prudent and careful stance that Barita has come to represent, and we need a strong hand to restrain the risky tendencies which now prevail in the marketplace," Humphries-Lewin said of McNaughton. "I've enjoyed my company but I would like to see it continue."

Any IPO must be justified by evidence of solid performance, which McNaughton presented at the conference. He noted that over the period 2000 to 2009, for which the financial data is available, Barita never made a loss on income, growing its total revenue from $91 million in 2000 to $1.9 billion in 2009. "Since 2000, profits have grown from $41m to $127m in 2009, totally from internally generated cash flows," he said. "This is a remarkable achievement for a company that has been self- financed," he said.

Total Assets have also grown from $1.7 billion in 2000 to $11.8 billion in 2009, along with shareholders' equity, from $117 million to $849 million over the same period.
Barita's revenue stream ratios are 36/64 per cent along its interest income and non-interest income lines. According to McNaughton this approach is aimed at increasing "the level of revenue developed from non-income streams."

According to McNaugthon, Barita's efficiency ratios are no less impressive than those of other companies listed on the Jamaica Stock Exchange. Operating expenses declined from 58 per cent of total revenues earned in 2000 to 15 per cent in 2009. "The company has managed its cost effectively. This efficient utilisation of resources is another clear indication of the solid infrastructure of our management," he said. "Barita is an excellent investment opportunity. It will continue to be stable and a good company to invest in."

Barita is licensed by the Financial Services Commission, the Bank of Jamaica and the Jamaica Stock Exchange and is involved in equities trading, fixed income securities, foreign currency trading, asset management and investment research. The Barita Group is comprised of Barita Investments Limited and Barita Unit Trusts Management Company Limited, which together employs over 70 professionals and currently has three branches in Kingston, Mandeville and Montego Bay.

Alicia Roache
Jamaica Observer
Friday, November 27, 2009