JAM | Jun 11, 2024

Sagicor Select Funds undergoing strategic restructure

/ Our Today

Reading Time: 3 minutes

Durrant Pate/Contributor

With the sub-par performance of its two equity-traded investment funds since their January 2019 launch, Sagicor Select Funds Limited is undergoing strategic reorganisation.

Sagicor Select Funds, which operates the Sagicor Financial Select Fund and the Sagicor Manufacturing and Distribution Select Fund is converting these two exchange-traded investment funds into two unit trusts. The unit trusts will be registered with the Financial Services Commission and governed by the Securities (Collective Investment Scheme) Regulations, 2013.

The conversion of the funds into unit trusts is subject to obtaining all requisite approvals. This strategic reorganization is considered to be in the best interest of the Funds’ shareholders and was discussed and approved by the Board of both funds on May 8, 2024. 

Share price trading at heavily discounted rate 

The Sagicor Financial Select Fund and the Sagicor Manufacturing and Distribution Select Fund have seen on a consistent basis the trading price on the JSE at a relatively steep discount to the published net asset value (NAV) of each fund. In the case of the Financial Select Fund, the discount to NAV over the last six months ranged between 17 and 35 per cent.

In the case of the Manufacturing and Distribution Select Fund, the discount to NAV has been between 40 and 45 per cent. Fund directors and management “believe that the steep discount at which the shares trade on the JSE is primarily due to the illiquid market and weak demand for the shares.”

A shareholder, who wishes to sell his shares in a fund therefore has to reduce his asking price to attract buyers. If the funds were unit trusts, investors would have the option to purchase or redeem units in the unit trusts at the NAV subject to possible fees and any other restrictions. 

Benefit to shareholder 

The benefit to shareholders is that the units held in the new unit trusts would be priced with reference to the NAV, thereby reflecting the underlying “real value” to investors.  After due consideration, the Board has determined that conversion of the two funds to unit trusts is the most effective solution to the issue facing shareholders. 

Conversion process in detail

The conversion process will be undertaken as a court-approved scheme of arrangement involving the following steps: 

  • First, the FSC would be asked to approve the two new unit trusts. 
  • Next, SSFunds would file an application to the court to summon a meeting of shareholders in both Funds to vote on the conversion plan. 
  • Subject to the court granting the order, a shareholders’ meeting of each fund would be convened at which holders of shares in each Fund would vote on a resolution to convert their fund to a unit trust. 
  • If a majority in number of the shareholders in a fund holding in the aggregate not less than 75 per cent of the votes cast on the resolution vote in favour of the conversion, then the resolution would be treated as approved. 
  • Following the meeting, a report of the results of the vote on each fund would be made to the court and if a resolution in respect of a fund were passed by the requisite majorities, then the court would be asked to make an order approving the conversion. 
  • Upon filing the court order with the Companies Office of Jamaica, the scheme would become effective, and the assets and liabilities of a fund would transfer automatically into the corresponding unit trust which would be registered with the FSC. 
  • The shares held by the shareholders in a converted fund would be cancelled and each shareholder in a converted fund would be issued the same number of units in the corresponding unit trust. 
  • Each unit trust would be managed by Sagicor Investments Jamaica Limited, and the trustee is proposed to be JCSD Trustee Services Limited. 
  • On conversion, given the investment strategy of each unit trust, each unit trust will operate as a non-diversified unit trust. The unit trusts will be more actively managed and will consist of an appropriate mix of the listed companies within the financial sector and the manufacturing & distribution sectors, respectively.


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