Oct 2006 Financial News

Sagicor Financial Headed For Takeover?

Oct 23, 2006

THE proposed listing of Sagicor Financial Corporation on the London Stock Exchange (LSE) and the proposed removal of the company’s 20 per cent constrained share ownership provision could make the company vulnerable to a possible takeover. The chances of this occurring, however, would be influenced by the fact that Sagicor is not well known in the UK market and, although it is a large regional company, would be considered small on the LSE.

According to Douglas Skeete, founder of the Barbados Association of Corporate Shareholders, Sagicor’s limited presence in the UK market will also impact on the performance of their proposed listing on the LSE.

“Listing on an international exchange doesn’t necessarily mean you are in a better position to raise capital, nobody is going to buy your shares just because you are listed on a large stock exchange, you are not necessarily going to attract the attention of prospective investors. Sunbeach, for example, did so poorly on the AIM of the LSE, that the company’s performance was better on the Barbados Stock Exchange (BSE),” he pointed out.

Sagicor has called a ‘special meeting’ of shareholders on November 8, at Hilton Barbados, where the removal of the 20 per cent constrained share ownership provision in the company’s articles will be considered. The resolution to change these articles must be approved by not less than two-thirds of the votes cast by shareholders at the special meeting. The proposed removal comes on the heels of a recent recommendation to remove a five per cent restriction at the company’s Annual General Meeting held on August 11.

Skeete also questioned Sagicor’s decision to list in the UK, where it does not have presence, as opposed to the United States (US), where the company has a subsidiary, Sagicor USA Inc., located in Florida and headed by Maxine MacLure. Last year, Sagicor USA acquired American Founders Life, the life insurance operations of Vesta Insurance Group. Sagicor, according to Skeete, has permission to do business in 41 of the 52 states, in addition to the District of Columbia. “They do not have a presence in the UK market. I would have thought they would have sought a listing in the US market, but I do know it is not easy entering that market, it does have some very tough requirements to list, and it is easier to list in the UK. The important question is, how much attention will Sagicor garner from listing in the UK? The directors of course would have thought this through, but it would be interesting to hear their rationale for preferring to list in the UK, rather than in the US market.”

He continued, “I am not critical of a company trying to list on an international stock exchange where you have access to more capital, the question is the appropriateness of doing it, whether the timing is right, and whether you have built your brand sufficiently, so that when you list on the LSE, someone would want to buy your shares.”

He further noted that Sagicor may have not have considered a listing in the US because of the rigorous reporting requirements in that market, where companies are required to report their financial information quarterly, and have to meet their reporting deadlines.

“In that market you also have to [be] able to meet with investment analysts and answer a plethora of questions about your company. We in the region need to improve the amount of information we are getting in the local stock exchanges. Certainly the Securities Exchange Commission needs to change the reporting requirements and urge public companies to improve their reporting. The management of public companies also needs to get more information about their companies out to the press, there is a dearth of information. In order to get more persons interested in investing, they have to know the product,” he added.

Terence Murrell
The Barbados Advocate
http://www.barbadosadvocate.com/NewViewNewsleft.cfm?Record=28321
Monday, October 23, 2006.