Barita is being taken off the stock market!  You see their ads everywhere, so what’s going on?  Is it something shady?

So first of all, there’s nothing shady going on. Let me explain

Barita Investments is a local investment company that has been listed on the JSE since 2010. In 2018, Cornerstone Financial Holdings bought a majority stake in Barita. And now Cornerstone is restructuring.  As part of this restructuring, Barita will be taken off the stock exchange and replaced with something else.

So, Cornerstone Group owns Cornerstone Financial Holdings, which is the company that owns a 75% stake in Barita Investments and by extension Barita Unit Trust Management.

CFH also owns Cornerstone United Holdings Jamaica, which itself owns 100% of Cornerstone Trust and Merchant Bank.

Now, according to the Banking Services Act, any group of companies- in this case Cornerstone Group, which has deposit-taking institutions- Cornerstone Trust and Merchant Bank and other regulated entities… barita is an investment firm regulated by the FSC- must have all those entities under one financial holding company. 

They do this so that the BOJ can easily regulate and keep track of the companies to make sure everything is good.  

So what Cornerstone Group is trying to do is combine Cornerstone Financial Holdings and Cornerstone United Holdings. 

That will bring Barita Investments, Barita Unit Trusts Management and Cornerstone Trust and Merchant Bank all under one umbrella instead of split across two. 

The Barita team told KRM that the new financial holding company doesn’t have a name yet.

But FYI, this type of reorganisation isn’t new.  Cornerstone isn’t even the only company trying to reorganise right now.

A few years ago NCB Jamaica reorganised itself into the NCB Financial Group. Same with JN Group. And  Victoria Mutual Group and JMMB Group are currently in the process of reorganising. 

And this is a very similar case to what happened to NCB. NCB Jamaica which is the banking arm of the company was listed on the JSE. But when the company was reorganized, NCB Jamaica was delisted, and NCB Financial Group took its place.

So Barita Investments, which is the investment arm of Cornerstone, will be delisted and replaced with Cornerstone’s new financial holding company.  Not sure if they’ll keep the name Barita or trade as Cornerstone something.

And like I said, we reached out to the Barita team to find out what’s gonna happen to shareholders.

They told us that Barita shareholders will be offered shares in the new holding company. This is going to give shareholders access to Cornerstone’s banking arm through Cornerstone Trust and Merchant Bank and the investment arm through Barita Investments and Barita Unit Trust Management.  So now as an investor, you’ll have greater exposure to more of Cornerstone’s activities.

Now, the Barita team did tell us that there is no hard and fast deadline for all of this to be finalised because it still has to be approved by shareholders and has to go through the Supreme Court. So the reorganisation and delisting and relisting could take a while.

What do you guys think about this news? Are you excited? Are you wary?