NCB Financial Group to Acquire Guardian Holdings Limited

11 January 2018

A Firstline Securities Limited Blog by: Vishal Jadoo

The take-over of Guardian Holding Limited by the NCB Financial Group (NCBFG) will create a new regional power player in the financial services industry to join the likes of Republic Bank, RBC Royal Bank and Sagicor Financial Corporation.

As per revelations in GHL’s Directors’ circular on December 29th 2018, NCBFG should acquire a minimum of 21.89 % of GHL’s outstanding shares. Directors Arthur Lok Jack, Imitiaz Ahamad, Nicholas Lok Jack and Peter H Ganteaume have indicated their acceptance of or intent to accept the take-over offer. This will take the Offeror’s total holding of GHL shares to 51.89% within the range of 50.01%- 62.00% deemed acceptable to the Offeror.

What does this mean for the minority shareholder?

The following are some points to consider when making the decision to accept the offer:

  • An opinion of the take-over offer was sought by a Special Committee of the Board of Directors, the company retained to provide such opinion was BroadSpan Capital LLC of Miami Florida. In their assessment of the offer BroadSpan’s opinion was, “the Offer is fair, from a financial point of view, to the shareholders”


  • The Offer provides liquidity to shareholders who may be seeking to exit an investment while maintaining most if not all of its value in an otherwise illiquid market where investors would normally be required to “give up a liquidity premium” when trying to sell securities.


  • The Offer was made in United States Dollars (USD). It is well-known that there appears to be issues with the flow of USD in Trinidad & Tobago. The payment of USD would act as an inducement to some investors seeking USD to meet USD denominated commitments or investment opportunities.


  • Though deemed fair, the Offer is on the low end of the valuation range. The range of potential values for GHL, based on a valuation done by Ernst & Young commissioned by NCBFG, was $13.95 to $25.21. Firstline Securities Limited’s valuation methodologies resulted in a price range of $15.38 to $20.23. Based on these valuations of the prospective value of GHL on a standalone basis, the offer seems to be on the low side.


  • The Offer seems to be undervaluing the worth of GHL shares: it seeks to compensate existing shareholders with a minimal value for an asset that has up to 33% upside potential prior to synergies that can be realised from the acquisition. Based on the average expected price from both valuations and current dividend yield, investors expect to earn 17.51% from an investment in GHL over the next twelve months


  • The Offer presented only in USD can be considered an attempt to capitalise on the shortage induced “Black Market Premium” for USD currency .When this “premium” is taken into consideration, the USD offer of $2.35 would represent a premium of 59% over current market prices (assuming a black market rate for USD of TTD $8 to USD$1 and the market price of $16.55 as at the close of business on December 7th 2017).


  • The combined entity of the acquisition will benefit from synergies and market expansion opportunities that can be beneficial to both GHL and NCBFG shareholders. Minority shareholders can seek to benefit from the synergies created by the combined entity by holding their positions in GHL equity.


  • The Chairperson and largest shareholder of NCBFG, Mr. Lee-Chin is an influential business person in the Americas, the Caribbean, and more specifically, in Jamaica where he chairs the Government’s Economic Growth Council. Given Mr. Lee-Chin’s track record in business and his influence in the Caribbean it stands to reason that the merged entity will grow and create value for all shareholders.


  • Firstline Securities Limited has conducted a valuation of GHL and as such we propose a Hold recommendation for existing GHL shareholders, with a suggested price target of $18.17 ($16.35-$19.99)


In preparing this analysis we have examined some of the more pertinent issues which are by no means a complete list of all things to consider. All investors, either institutional or individual have unique, circumstances, constraints and requirements that will vary from others, these are the characters that guides their investment decision making process.


The information and material presented in this blog are provided to you for informational purposes only, and are not to be used or considered as an offer or a solicitation to sell; or an offer or solicitation to buy or subscribe for financial instruments; or as any advice or recommendation with respect to any financial instruments.

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