Apr 2009 Financial News

Business environment ripe for consolidation, says Sookoo

Apr 26, 2009

RBTT Financial Group CEO Suresh Sookoo has said there may be another series of mergers and acquisitions within the Caribbean as businesses position themselves to take advantage of opportunities created by the global financial crisis.

Sookoo made the observation last week at an American Chamber of Commerce of Jamaica (AMCHAM) breakfast forum at the Hilton Kingston Hotel. The Trinidadian explained that some regional companies will undoubtedly falter and fail during the ongoing recession that is crippling economies worldwide, but said this will consequently free up market share and present good deals for those firms that are able to buy into or acquire undervalued entities.

"There are in fact opportunities if your company and balance sheet is strong," said Sookoo. "There are going to be business opportunities and market space that are going to be made potentially through another wave of consolidation within the Caribbean where businesses will combine because they need more resources to survive in a smaller market."

In the aftermath of the late 1990s financial crisis in Jamaica, a handful of Trinidadian businesses saw opportunities in Jamaica and made successful entrances into the market. Among them, the Royal Bank of Trinidad and Tobago formed RBTT Jamaica after acquiring Union Bank, a merger of four Jamaican commercial banks - Eagle, Workers, Island Victoria and Citizens - following their collapse in the financial meltdown.

Sookoo suggested that the companies that would survive the current recession were those that prudently review their businesses, internally and externally.

"Your margins are coming under pressure and your break-even point is smaller, therefore you need to find ways to survive in this environment," noted the RBTT CEO.

"What a company needs to do is look internally and ask 'What is my efficiency level? and 'What have I been doing that I can stop doing because my cash flow is down?'" he continued. "(Externally), each individual business, based on what they do, needs to look at their environment and ask (themselves) whether they need to change direction."

Importantly, Sookoo added, businesses need to have financial flexibility in the present economic climate.

"You need to be flexible, aware and resilient; you have to have the capability to move with the times," he said. "If you have a high level of debt, you need to find ways in which to reduce that debt to keep it at a capacity where the bank doesn't own you."


Source:
Julian Richardson Assistant business coordinator
richardsonj@jamaicaobserver.com
Jamaica Observer
Sunday April 26, 2009

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