Jan 2008 Financial News

Duprey’s rules of engagement

Jan 24, 2008

Chairman of Colonial Life (CL) Financial and Angostura Holdings, Lawrence Duprey, earlier this month hosted a special luncheon for the cream of Jamaica’s business community in which he gave a range of views on his business and global aspirations.

Angostura is looking to acquire of Lascelles deMercado and bring the Appleton Rum brand under its stable of spirits. The deal is placed at around US$10 a share, bringing the whole enchilada to around US$900 million. He noted that Appleton, like Angostura has the potential to be a global brand.

The following is an edited version of a story that appeared in the January 18 issue of the Jamaica Observer

GLOBAL THRUST

When you go out into the international markets you ask yourself — Angostura is on this shelf, why isn’t Appleton? Or Appleton is on ten shelves and Angostura is only on two. Now as you go about asking questions you see it is all about resources. Many times those resources are financial resources.

“As you look across these beautiful islands that we call home, we know we have been given sunshine, beautiful weather, fantastic beaches, but we have not been blessed with the financial endowment that they have perhaps in the Middle East.

“That means that people like me see myself as an economic nationalist helping to build the country from which I came, the only solution that I saw was that those of us working from a position of strength have to get together. We have to combine both our financial and intellectual resources in order to compete globally. Why? Because comparable advantages are really the operatives in the marketplace,” said Duprey.

LASCELLES BID:

BUILDING STRENGTH

He took the view that Jamaica’s business community should look favourably upon Angostura’s bid for Lascelles because the Trinidadian company is not just coming to Jamaica but is sharing its assets and expertise with it. “We are getting together because we can’t compete globally, but we can compete locally, and if we get together our strengths will assist both of us mutually to compete out there in the international marketplace.

“The tide is now running in our favour because the consumption of rum is in the ascendancy so we have to do it right. We feel by working together we have a better chance of doing it right.”

Duprey emphasised that the structure of this deal means that the people of Jamaica will continue to get the benefits of their resources. He declared that Lascelles will remain listed on the Jamaica Stock Exchange (JSE) with Angostura doing likewise on the Trinidad & Tobago Stock Exchange (TTSE). The fact that separately liquidity is limited did not escape his attention, thus the aim is to get both companies together, build a global brand and get liquidity by launching it on a larger exchange, preferably London.

“We would like to bring financial liquidity to a company that is owned by Jamaicans and Trinidadians, so that it would strengthen our financial system and open trading opportunities not only for ourselves but for people from outside who want to buy into what we do.

“The way the share price and buy-out is structured means one can choose to stay in or get out. But let me give you a word of advice. I will guarantee that if one stays in, the rate of return will be higher than any other stock listed on the JSE and on the TTSE. “Why? Because we have built a market globally with strong products and we are good producers looking for liquidity on the London Stock Exchange for a fairly large-sized company.

“Our vision is to create a drinks company that produces high-quality spirits marketed in niches where we can maximise the profit from quality products. This is not Caribbeanisation in theory it is Caribbeanisation in practice,” said Duprey.

COMPETING GLOBALLY

The CL Financial boss went on to say that, therefore when Caribbean countries go out in the world to compete they need all the help they can get and the best help always comes from home.

“This is why we saw an iconic brand like Appleton out there and we envied some of the positions it held. We then took a look at our brands and we said. “Let’s join forces and fight the battle together.” If we have the right intellectual capital and we manage our resources well, then we don’t have to be as poor as we are. We can distribute income more evenly so that it doesn’t just reside with a few because there will be enough to go around. That is what CL Financial and Lawrence Duprey is all about.

“We hope one day that the marketing expertise from the Caribbean can compete with the marketing expertise, say, from Japan for our products and make our products stand out as the premium products that they are. They are indeed the luxury products of choice. Small economies like ours cannot be blockbusters like the United States. Our product runs are short, therefore they should be high quality. As high-quality products they should be well promoted and managed with a high level of profit. Luxury and premiumisation is a trend that is occurring now in the market, which plays right into our hands. We can now combine two great brands that give us the advantage.”

CANE POWER

He believes that with oil at US$100 a barrel, the Caribbean has to take a second look at this valuable industry to see whether the region has an energy component coming out of cane which can be consumed by motor cars.

CARIBBEAN ENERGY

He pointed out that the Caribbean has witnessed economic changes that will affect its citizens’ livelihoods severely. Supporting his premise he referred to oil prices hitting the US$100 a barrel mark earlier this month. “ This means that those who are the have-nots will be more disadvantaged in the future than they were in the past because the world has changed. Countries in the Caribbean, like Jamaica, that are not blessed with plentiful hydrocarbons are going to have a lesser chance in the future than they did in the past unless something happens unexpectedly and oil slides down to around US$30 a barrel.

“But that is not in the foreseeable future in the book that I read,” declared the chairman of CL Financial. He said that his recent travels have taken him to the Middle East where he witnessed a massive transfer of wealth. “The profit on a barrel of oil at US$100 going to a small country like Abu Dhabi with 200,000 people sets in place the picture. The per capita savings in these Middle East countries are astronomical, and countries in the Caribbean cannot begin to imagine the level of wealth compared with the Caribbean.

“The question of energy in the Caribbean must be faced in a different way in the future than the way it was faced in the past because oil at US$100 a barrel has become an impoverishing agent to people like us,” said Duprey.


Source:
Trinidad and Tobago's Newsday
Thursday January 24, 2008

http://www.newsday.co.tt/businessday/0,72102.html