Pan-Jamaican Investment Trust (PanJam), now used primarily as a multi-purpose investment vehicle with stakes in commercial real estate, financial services and retail, reported a 15 per cent rise in stockholders' profit, to $1.142 billion, last year, largely on the back of the strong returns enjoyed by its subsidiary, First Jamaica Investments. First Jamaica's profits came mainly from returns on its minority stake in the insurance group, Sagicor Jamaica and the robust performance of its property business.

"Our share of results in associated companies, represented by First Jamaica's 24.5 per cent investment in Sagicor Life Jamaica and our 20.8 per cent holding in Hardware and Lumber Ltd, improved by $107 million, up 14 per cent, to $846 million," the company's chairman, Maurice Facey, said in a report to shareholders.

Minority stakes

In other words, its minority stakes accounted for approximately 52 per cent of $1.62 billion in net profit (before minority interests) earned by PanJam last year. But all of it would be out of the more than $3 billion returned by Sagicor, given Hardware and Lumber's $285.6 million loss in 2008.

Most of the rest of the profit, $537 million, an increase of 22 per cent, came from the property rental and management operations conducted by First Jamaica, with investment income making a minor contribution.

Before its earnings from minority interests, PanJam recorded operating profit of $898.8 million, on income of about $1.57 billion.

Effectively controlled by its founders, the Facey family, PanJam, is, like its subsidiary, First Jamaican, listed on the Jamaica Stock Exchange.

PanJam used to be a diversified conglomerate, with interests in insurance, merchant banking, tourism, manufacturing and the initial foundation, real estate. Indeed, the Faceys and PanJam played a major role in the development of what is now the New Kingston business district.

However, in the late 1990s, PanJam began a major shift in strategy, with a retreat from business segments outside of financial services and real estate. But at the turn of the decade, it accelerated the reform by selling its First Life insurance and merchant banking group to Life of Jamaica (now Sagicor), as well as merged its construction material and home improvement stores, Hardware and Lumber, with the similar businesses operated by GraceKennedy. It took minority interests in the larger operations that resulted from the swops.

Economic environment

At the same time PanJam formed First Jamaica, which has concentrated on property and portfolio management, a segment of the business that has continued to perform well even in Jamaica's tight economic environment.

First Jamaica, for instance, reported that it maintained a 98 per cent occupancy of its properties and that gross income from this segment of the business grew 17 per cent, to $1.126 billion. The group was profitable enough to absorb an 18 per cent, or $164 million increase in property management expenses.

business@gleanerjm.com