Sagicor Investments buying AIML securities business

May 10, 2022

via Jamaica Gleaner

Following its acquisition of 100 per cent of the shares in Alliance Financial Services Limited, ASFL, in March, Sagicor Group Jamaica is also taking over the securities portfolio of Alliance Investment Management Limited, AIML, through subsidiary Sagicor Investments Jamaica Limited.

Sagicor Investments and AIML have signed a definitive agreement for the purchase of the dealer book, Sagicor Group announced on Monday, saying, subject to due diligence, the deal is expected to be completed over the next two months.

This is the second major move by Sagicor, which is into insurance, commercial banking, stock brokerage and investments, property development and management, pension funds and wealth management, to grow its business by taking over parts of the business of companies under the troubled Alliance brand. Although sharing the brand, AFSL and AIML are separate entities.

The Alliance Financial acquisition had received the blessing of the Bank of Jamaica, which reinstituted the company’s cambio and remittance licences under Sagicor’ new management. The release from Sagicor this week about the deal with AIML did not mention any requirements for approval by the Financial Services Commission, FSC, which regulates securities dealers.

In February, the FSC confirmed to the Financial Gleaner that AIML remains a licensed dealer “and continues to operate with FSC supervision in line with our mandates”.

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In a response to Financial Gleaner queries, Sagicor Group said the FSC, as Sagicor Investments’ regulator, had already been notified of the potential deal when the parties commenced negotiations.

“Whilst due diligence in this regard is the responsibility of Sagicor, the FSC has been fully engaged in this matter and has provided SIJL with guidance from a regulatory perspective,” Sagicor Group said on Tuesday via email.

In December, the FSC had said it was increasing its monitoring of AIML in the wake of the company having been charged with a breach of its fiduciary responsibility. The Financial Investigation Division, FID, had charged the entity with failure to file threshold transaction reports as mandated under the Proceeds of Crime Act for transactions of, or exceeding, US$15,000 or its equivalent in any other currency.

The charge accompanied others which were levelled at related company Alliance Finance Limited as well as its principals, Peter Chin and Robert Chin, who were charged with various breaches of the Bank of Jamaica Act and the Banking Services Act.

Sagicor is already looking forward to the increased investment business from the onboarding of AIML’s business and clients.

“This latest acquisition of the AIML book of business will further expand SIJL’s client base and allow us to offer the best possible service and investment returns to our new investment clients,” Sagicor Group President and CEO Christopher Zacca said in the company release.

Alliance Investment Management was originally incorporated in 1996 as Alliance Capital Limited, a licensed securities dealer offering asset management, securities trading and financial advisory services. Up to December 2020, AIML had owned 10 per cent of Alliance Financial Services. The latter company was incorporated in 2004 to assume the cambio business previously operated by AIML.

In 2020, Alliance Financial also held loans totalling $250 million from AIML. The loans, taken out in 2018, were said to accrue interest at a variable rate of one per cent per annum, plus the six-month Treasury rate, and scheduled for repayment in 2028 with the option to prepay after five years, or at an earlier date, subject to the company obtaining the prior written consent of the FSC.

“Pursuant to these agreements, all claims by the company were made subordinate to claims of the clients of Alliance Investment Management Limited,” according to a notation in the prospectus for Alliance Financial’s aborted public share offer on the stock market last year.

According to its published financials, at December 2020, Alliance Financial had combined loans outstanding of $2.1 billion, including a corporate loan of $1.3 billion, and another for $774.5 million to Alliance Finance Limited.

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