Mon | Nov 20, 2017

VM reactivates investment arm

Published:Sunday | November 12, 2017 | 12:00 AMHuntley Medley
VMBS Group president and CEO Courtney Campbell.

The VMBS Group, armed with more than $4 billion in cash from recent deferred share issues, is repositioning to become more active as an investor and provider of equity and loan financing to businesses.

The vehicle being utilised to achieve this objective is the previously inactive Victoria Mutual Investment Company Limited (VMIC).

VM Investment has been reactivated to drum up corporate financing business for the group with a footprint in Jamaica, the United Kingdom and the Cayman Islands.

"What we are hoping to do here is to offer some new products for the business community to facilitate private sector-led growth," VMBS President and CEO Courtney Campbell said in an interview with Gleaner Business.

Through its main operations and subsidiaries, VMBS is also involved in stockbroking, securities trading, property development and rental, housing development, property management, money transfer, pension management and general insurance.

The services to be executed by VMIC include corporate loans and leases, insurance premium financing for businesses and the underwriting of equity listings and initial public offerings arranged by VM Wealth. VM Investment will fall under the immediate leadership of group chief investment officer and head of VM Wealth Devon Barrett.

 

MOREBULLISH

 

With the new configuration, Victoria Mutual is now more bullish on local equities with plans to buy into firms it takes to market as well as to provide private equity investment for cash starved companies.

"We will be taking a kind of longer term position in small companies that we think will have potential and just need our support in terms of governance and so on, then we will exit on a pre-agreed basis after five or seven years," Campbell disclosed.

This move, he said, was born of determination by the company he has led since April 2016 to become more relevant.

"By providing some capital to facilitate further growth and expansion, we think we can help some business people who have built up a good, strong business and would like for that business to take off," he said.

The move is among the growth strategies being pursued by the VMBS head, who has set his sights on the group reaching an on and off balance sheet asset target of $260 billion by 2020.

VW Wealth has for years been active in the equities market, repo business, and in more recent years in corporate finance. The activation of VMIC is expected to see some streamlining. VM Wealth will zero in on its core functions of stockbroking and securities trading, with corporate financing being hived off to the revived company.

This latest repositioning within VMBS follows closely on the heels of rule changes approved by the mutual society's members in August.

With the new rules, Campbell said, the 139-year-old VMBS is also rolling out a suite of new products for its nearly 300,000 active savers and prospective members. Consumer loan disbursements are to come on stream by the second quarter next year, credit cards by the fourth quarter, and international debit cards by 2019.

The VM group head was unwilling to share projections for segment contribution to revenues from the new services, but said the leadership team was confident about the future success of the products.

VMBS is the larger of the only two remaining building societies in Jamaica, with more than $100 billion in assets and $70 billion in savings at June this year, as reported by the central bank. The other is Scotia Jamaica with assets of

$28 billion.

 

UPBEAT ON CORE BUSINESS

 

Campbell is equally upbeat about the performance of VMBS's core business of mortgage financing, having granted $4.77 billion in new mortgage loans in 2016 and with record monthly disbursements this year running in the region of $700 million.

This performance is believed to be driven in large part by what is being described as an integrated home ownership service provision, which sees VMBS encouraging members to save, search for properties through VM Property Services, and secure financing - all in one place.

In addition, mortgage application processing time is said to have been slashed to three days, an online portal introduced last year and a dedicated mortgage centre opened at Liguanea in Kingston.

The more aggressive investment and loans posture by VMBS is buttressed by its capital-raising capabilities, built into the new rules governing its operations.

Earlier this year, the building society raked in $4.2 billion from deferred shares issued as five-year instruments - surpassing the initial $3.5 billion fundraising target - and amassed cash far in excess of the $2.5 billion in expired shares the issues were intended to replace.

Campbell believes the current moves by the group are serving to increase competitiveness in the business.

"Our business model emphasises low mortgage rates, low loan rates, low fees and high savings," he said.

huntley.medley@gleanerjm.com