Following the restructuring of the VM Group, the entity is planning to expand its footprint in the Caribbean.
While the move forms part of the group’s thrust to increase its membership to one million from the current figure of approximately 320,000, chief investment officer (CIO) of VM Group and chief executive officer (CEO) of VM Wealth Devon Barrett also indicated that the financial services provider has identified the need for more sophisticated financial products in other Caribbean territories, where it can leverage its expertise in the industry and explore new opportunities.
“So there are couple of things that would necessitate the regional expansion and we take it from the perspective of the in-country situation first. The competition in Jamaica is intense and there’s nothing wrong with competition… and so what we have to think about, as a business, [is] how we benefit from that. So if you take all the business lines you see there, you’ll see that we’re competitive in all those areas and we want to grow more in those areas,” Barrett told The Jamaica Observer on Monday at VM’s office in Half-Way-Tree, St Andrew.
“We’ve also developed a level of expertise, over the 140-odd years we’ve been around, that we see as a need in the region right now. We’ve been to a number of countries around the region and when we look at what is happening there, we’re seeing that they don’t have the level of financial services that we have here in Jamaica,” he added.
Principal among the needs the CIO identified were investment banking and asset management services, so building out those strategic business units in the group will be paramount to regional expansion. Though banks in some countries have huge deposits on their books and can offer loans, they face challenges offering products like repos, debentures, corporate bonds, preference shares, among others, he explained.
Currently, VM Wealth has J$33 billion in funds under management through a wide range of unit trust portfolios and portfolio management accounts.
“We’ve been to a number of countries around the region and when we look at what is happening there, we’re seeing that they don’t have the level of financial services that we have here in Jamaica”— Devon Barret, chief investment officer, VM Group
The CIO also noted that the need for such products and services extended beyond English-speaking Caribbean countries as representatives from the VM Group had travelled to countries such as Costa Rica, the Dominican Republic and Haiti and surveyed the needs of the financial services landscape.
“We’ve been to Dom Rep, we’ve been to Haiti, we’ve been to Costa Rica, we’ve been to almost every country in the region. Haiti is not too right, right now, because of the political issues, so that is something on the back burner. But Dom Rep is a really good opportunity right now because it has the size, in terms of population, and it has the spending power, in terms of pocket, that can help our business,” Barrett said.
He also said the group had an eye on oil-producing newcomer Guyana, which he described as “green right now and a really good opportunity for expansion”.
“We’ve been there more than once because we’re looking at the opportunities to see where and what we might exploit in Guyana, so yes, Guyana is definitely on our agenda right now,” Barrett added.
He said that countries that lack investment bank and wealth management expertise, however, bypass countries like Jamaica and Trinidad and Tobago, which have strong financial markets, preferring to outsource to or import expertise from the developed world. Given the strength of Jamaica’s financial market, and the products that investments firms like VM Investment Limited have created, Barrett said other Caribbean countries would be open to purchasing the products.
The VM Wealth CEO also made a strong case for the Jamaica Stock Exchange (JSE) to market its services outside the island.
“The stock market here in the region is underutilised, because we go to other countries in the region and we see that they want to participate in the stocks but they just aren’t yet [ready] to do so right now. So what we’re helping them to do is to see that side of the business and create the opportunities for them there,” Barrett stated.
Another area of opportunity that Barrett said the group would explore, and where it thinks it could lend its expertise, is pension fund management, given the low market penetration of the service across the region.
He also pointed to remittance as an area of growth in the Caribbean region in which VM hopes to make its mark. While the space is dominated by a few major players, Barrett said VM is “seeing a big opportunity now to get into that space” and offer a “less expensive way” and “a more convenient way of accessing money”.
When quizzed about how VM Group would operationalise the expansion, Barrett said through acquisition and partnerships.
“So we’re pretty open in terms of how we operate. If you notice that BCIC, our insurance affiliate, we are right now a 39 per cent owner in that business. We participate at the policy level, in terms of directorship, and so on. So we’re not looking to run many of these businesses that we’re partnering with. We want the management to do that and we [will] participate at the policy level,” Barrett said.
VM Investments Limited also holds 30 per cent interest in the Barbados-based peer-to-peer lending platform Carilend.
President and CEO of VM Group Courtney Campbell, nevertheless, said that the group is not averse to building from the ground up in new markets.
“Right now the entry strategy has been to partner with people who have similar values and who will provide some value for our members and help us to take our products to those markets as well,” he chimed in.
Barrett explained too, that, in order to undertake this kind of regional expansion, the group will have to raise capital. Given the nature of the group’s holding under Victoria Mutual Building Society, the only way to do so is through deferred shares. However, with a restructured group, the entity can list its subsidiaries on the JSE through ordinary and preference share offers and raise capital that will underwrite its regional expansion.