By: Kimberly Ramkhalawan
November 29, 2022
PROVEN Group Limited, an investment Company has been awarded a Corporate Credit Ratings of CariBBB (Foreign and Local Currency) on the regional rating scale from the Caribbean Information and Credit Rating Services Limited (CariCRIS) while it has been reaffirmed jmA on the Jamaica national scale.
According to CariCRIS, the regional scale ratings indicate that the level of creditworthiness of this obligor, adjudged in relation to other obligors in Jamaica and the wider Caribbean is ‘adequate’ and ‘good’, maintaining a stable outlook on the ratings. CariCRIS adds that this stable outlook is premised on the expectation that PROVEN will continue to have profitable operations over the next 12-15 months bolstered by the Group’s recent acquisitions of Roberts Manufacturing Company Limited1 (RMCL), PROVEN Bank (Cayman) Limited2 (PBL) and Heritage Education Fund Limited3 (HEFL) as well as its 20 percent equity interest in JMMB Group Limited (JMMBGL)4.
CariCRIS however says it will be keeping an eye on how PROVEN treats with ‘aggressive interest rates hikes’ it attributes to the global geopolitical environment, something it says “can challenge the Group’s overall financial performance over the next 12-15 months”. The regional rating agency says “PROVEN’s ratings reflect its continued good asset quality underpinned by its diversified net loans and advances and investment portfolios and a funding profile characterized by low funding costs and comfortable capitalization”. Its adds that improved financial performance despite reduced operating profits which were impacted by costs associated with its recent acquisitions, together with adequate policies and procedures, enhanced by the implementation of an Enterprise Risk Management Framework have aided its current ratings. CariCRIS makes note that “these rating strengths are tempered by the uncertainty in the global economic environment which affects PROVEN’s major operating countries”.
Factors that could, individually or collectively, lead to an improvement in the ratings and/ or Outlook include “an improvement in operating profit greater than 20 percent for 2 consecutive years, cost to Income ratio improves to 75 percent and below, and an improvement of asset quality ratio to below 8 percent”.
However, it notes that a lowering of the ratings and, or outlook could be impacted by several things on the national front including “a deterioration in the GOJ’s credit rating over the next 12-15 months, systemic increase in liquidity pressures in the environment leading to funding withdrawals from large institutional investors, and an economic environment negatively impacting revenue streams leading to losses”. As for internal issues, it says “a deterioration of asset quality ratio to over 12 percent, a possible increase of PROVEN’s stand-alone debt to equity ratio to above 2 times, and a “systemic increase in liquidity pressures in the environment leading to funding withdrawals from large institutional investors” can also lead to lowered ratings.
Earlier in October, PROVEN Group Limited shared that it will be acquiring the remaining 25 per cent stake in Boslil Bank Limited from former Chief Executive Officer (CEO) Ryan Devaux in a US$10.21m deal. The move follows approval from the Financial Service Authority of St Lucia on August 31 and approval by Proven Group’s board on October 6.
On February 1this year, PIL completed the acquisition of Fidelity Bank (Cayman) Limited. In order to comply with the conditions of approval set out by the Cayman Islands Monetary Authority, the Board of Directors approved a corporate restructuring to facilitate the creation of a bank holding company.
The latest ratings come following a step down by one of its directors, John Collins who resigned as a director of Proven Group Limited effective November 11.
While the company says it will complete a rebranding exercise among its wholly owned portfolio companies in an effort to leverage brand strength and create synergies across the Group, moving the name from PROVEN Investments to PROVEN Group.