Mayberry CEO: Scotiabank Buyout Will Inject C$500m Into Market, But at a Cost

The buyout of Scotia Group Jamaica Limited's (SGJ) minority shareholders will pump roughly C$500 million into the local market in the short term, but will permanently shut out local investors from one of Jamaica's most profitable companies, according to Mayberry Group CEO Gary Peart.

"In the short term, C$500 million comes to market, so that's good," Peart said in a written response to the Financial Gleaner. "In the long term, they will be losing out on profits from the second most profitable banking institution and probably one of the top five profit-making entities in Jamaica."

Scotia Group confirmed Friday that its Canadian parent will pay roughly C$500 million (J$56 billion) to acquire the roughly 28 per cent stake in SGJ it does not already own, in a transaction that would take the bank private and delist it from the Jamaica Stock Exchange. Completion is targeted for the fourth quarter of 2026.

Peart, whose Mayberry Group operates a wealth management arm and a fund that invests billions of dollars in local stocks on its own behalf and for clients, said the immediate market impact should be positive.  

"At this time, it's very positive for the local stock and bond markets because the recipients are likely to reinvest in the bond and equities markets, which should lift both," he said.

But the longer-term picture is less straightforward. A delisting would leave local investors and pension funds searching for equally safe investments with dividend yields in the 4 to 5 per cent range — a gap that may be difficult to fill given SGJ's scale and consistency as a dividend payer.

Keith Collister, Executive Chairman of the Appliance Traders Group Pension Scheme — the pension fund for all Sandals and ATL Group companies in Jamaica — declined to immediately comment on the matter.

Under the arrangement, Scotiabank Caribbean Holdings Limited (SCHL), which currently owns 71.78 per cent of SGJ, will purchase the non-controlling stake at $61.50 per share in cash — a roughly 13 per cent premium to the 30-day volume-weighted average trading price on the JSE as of June 11, the last trading day before the announcement. Shares traded higher on Friday to close that gap.

Aside from Scotiabank’s parent holding 2.23 billion of the total 3.1 billion shares in issue, the largest minority shareholders in SGJ as at April 30 included the Sagicor Pooled Equity Fund with a 1.97 per cent stake, the state-led National Insurance Fund with a combined 1.96 per cent holding across two accounts, and an SJIML account holding 1.79 per cent. Other significant holders included Resource in Motion Limited at 1.29 per cent, an SIJL-linked account at 1.02 per cent, the GraceKennedy Pension Fund at 0.81 per cent, the NCB Staff Pension Fund at 0.75 per cent, Sagicor Select Funds' Class B shares at 0.40 per cent, and the PAM Pooled Equity Fund at 0.36 per cent. Together, the top 10 shareholders control roughly 82.1 per cent of SGJ’s issued shares.

On Friday, President and CEO Audrey Tugwell Henry said the “Bank of Jamaica has not raised any concerns" about the deal. It, however, remains subject to customary regulatory and shareholder approvals. She framed the transaction as a vote of confidence in the Jamaican operation.

"Our commitment to Jamaica has been strong and continues," Tugwell Henry said. "The decision represents confidence in the strength of the business we run here."

She noted Scotiabank has operated in Jamaica for 137 years and has never left the market, even through periods of financial sector restructuring. 

She added that the bank's recent quarterly results underscore its financial position. "We are proud of being a financial fortress, and you can see from our April second-quarter results," she said.

SGJ made $6 billion in profit for the quarter compared to $5 billion a year earlier. 

Tugwell Henry said the transaction is not expected to have a material impact on SGJ's day-to-day operations, and that the leadership of the Jamaican operation has historically been local and is expected to remain so.

"I cannot speculate," she said when asked directly about leadership changes, before noting that the heads of SGJ's local operations have predominantly been Jamaican, going back to Bill Clarke, who left the bank in 2008 after 40 years of service. "They have confidence in Jamaicans running this business and have for many decades, and my expectation is it will continue."

The transaction will proceed via a court-approved Scheme of Arrangement under the Companies Act, 2004, requiring approval from a majority of minority shareholders voting at a court-ordered meeting, at least 75 per cent in value of those voting shareholders, and sanction by the Supreme Court of Jamaica. 

As of April, SGJ held $843 billion in assets. Its parent, the Bank of Nova Scotia, reported approximately US$1.5 trillion in assets and trades on the Toronto and New York stock exchanges under the ticker BNS.  

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