William Massias is selling 85 per cent of his 94 per cent stake in Capital Solutions. - File

William Massias, majority shareholder in Capital Solutions Limited, is selling off all but nine per cent of the asset management and financial advisory firm in a deal said to be worth about US$4.6 million (J$409.4 million).

A deal is expected to be struck by November.

"Capital Solutions is in the final stages of negotiations with Mark Anderson Jones to purchase 85 per cent of the shares of the securities dealer company," said Vanceta Ramsay, chief executive officer (CEO) of Capital Solutions.

Massias, acting on "a unanimous decision of the company's shareholders in 2008", agreed to reduce his majority ownership, she said, from the current 94 per cent.

The company, she added, needed additional capital to finance growth plans - both for products and operations.

Ramsay, who replaced Massias at the helm of the company back in January 2008, first in an acting role and a year later as president and CEO, said the transaction with Jones was structured with an initial cash injection of US$600,000 (J$53.4 million), representing the price at which the 85 per cent shares were valued under the sale agreement.

Supplementary agreement

Another US$4 million (J$356 million), in what the CEO referred to as "suitable assets", is to be injected later, pending a supplementary agreement.

Negotiations are expected to be finalised by November 1.

The deal is subject to regulatory approval by the Financial Services Commission (FSC) and the Bank of Jamaica, both of which are putting Jones, an American with business in Jamaica, through a "fit and proper" test.

Jones is managing director of International Asset Services Limited, a local debt-recovery company and, according to Ramsay, formerly one of the main talents behind the consolidation of Union Bank Jamaica Limited which is now known as RBTT Bank Jamaica Limited, following its acquisition by the Trinidad-based RBTT Financial Group.

Capital Solutions was founded some 11 years ago by William and his father Aubrey Massias, who owns and retains 6.0 per cent of the company.

Capital Solutions, which operates a single office in Kingston, is one of the smallest players in the securities industry with a $1 billion asset base.

The company is, however, in expansion mode - a Mandeville office is scheduled to open in December and another in Montego Bay by the close of its financial year four months later - and hopes to grow assets by 100 per cent within its financial year ending April 2010, according to Ramsay.

The company offers investment management and real estate investment services, and operates a cambio. Its off balance sheet funds under management are estimated at $200 million, while its loan portfolio is valued at US$4 million (J$360 million).

As a financial services firm, Capital Solutions falls under the regulatory umbrella of the FSC. As a cambio operator, it is monitored by the Bank of Jamaica.

The company's business operations include forays into the telecommunications and payroll advance services through affiliates, Pay Day Advance Limited and Island Networks, respectively.

Back in 2007, Capital Solutions initially struck a deal to offer brokering services to an offshore banking outfit based in Colorado, United States, but did not follow through on the arrangement.

Strategising

The company, however, continued to seek out new terrain in 2008 and into 2009.

"The company has been aggressively strategising to revamp its core businesses from its earlier dependence on high-risk loan facilities which had become non-performing," Ramsay told Wednesday Business.

The drive to expand, she said, has been complemented by changes in the board and management.

Troy Brennan was named chairman, Ramsay was promoted from vice-president of financial services to CEO, and new recruits brought in, including Jasmine Sappleton, formerly of Scotia DBG Investment, who took over Ramsay's old job.

Similarly, Vaughn Cunningham, also formerly of Scotia DBG Investment, has been named senior foreign exchange trade executive, Vennecia Scott vice-president of strategic planning, and Christopher Dunkley general counsel.

Vacant positions

The new management team has been in place since August 2009, with other vacant positions such as vice-president, investment operations, and wealth advisers to be filled.

A name change for the company is on the cards for the financial year 2010.

"The main change to our business model is to increase our market share among retail investors and the sale of the majority shares will coincide with the company's vision to bring a broader base of financial products to the market," said Ramsay.

"We intend to broaden our product base into debt restructuring services, structured corporate bonds, equity investments and a medium-term plan to register a stock brokerage unit," she said.

The restructured firm then plans to list on the Jamaica Stock Exchange, Ramsay disclosed, saying going public was a medium to long-term target.

sabrina.gordon@gleanerjm.com