Sunday, June 26, 2022

Pan-Caribbean group offers solution to financing gap between Guyanese, foreign companies

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It is no secret that Guyanese companies are largely unaccustomed to making the scale of investments needed to provide services to the still burgeoning oil and gas sector. After all, the development cost for just one of ExxonMobil’s offshore projects dwarfs Guyana’s annual budgets – in some cases, three to four times over.

Both government and private sector leaders have been looking in all directions for solutions. President Dr. Mohamed Irfaan Ali has encouraged local companies to form consortia. Vice President Dr. Bharrat Jagdeo has said government wants banks to accept contracts as collateral.

President of the Georgetown Chamber of Industry and Commerce (GCCI), Timothy Tucker, said more should be done for local businesses than banks are doing presently. So, the Chamber hosted a seminar with Angus Young at the Marriott Hotel on Wednesday.

Young is the Head of Regional Investment Banking and New Markets at NCB Capital Markets Limited, a pan Caribbean public company, cross-listed on the Jamaica and Trinidad & Tobago stock exchanges.

With US$12 billion in assets, US$1 billion in capital and “probably” US$2 billion in market capitalisation, Young told OilNOW that NCB can provide financing in a non-traditional way for Guyanese companies that want to serve the energy services industry in Guyana.

Young presented to the members of the GCCI the opportunity to make use of invoice factoring.

What is Invoice Factoring?

Invoice factoring is the acceleration of the payment of an invoice, Young told OilNOW.

“Basically, it is getting paid faster than if you were to get paid directly from whoever owes you,” he said. “So, maybe someone owes you and they would take a couple months to pay you, but you want to access the financing faster. We would buy the invoice from you and effectively, you get paid immediately. And we would wait to get paid by whoever owes you.”

This way, Guyanese companies would be able to access loans with NCB’s invoice factoring capabilities giving them a non-traditional form of collateral, so they can generate goods and services for the oil and gas sector.

Young said NCB has funding structures, balance sheets, external funding, intellectual capital, and know-how to provide financing at every layer of the capital structure, whether it be private equity, public equity, quasi equity, senior secure debt, unsecured debt, and mezzanine debt.

“At any layer of the capital structure, we have products and services and abilities to serve, and I think that really differentiates us from your typical traditional financial institution,” he added.

NCB Financial Group is the majority shareholder of Guardian Holdings, an insurance and financial services conglomerate headquartered in Trinidad.

Notably, NCB has provided financing for Nabi/KCL Oilfield Construction Services for the construction of ExxonMobil Guyana’s headquarters at Ogle Estate, on the East Coast of Demerara. Young said NCB has also provided financing to Guyana Sugar Corporation (GuySuCo), the state’s cultivator and producer of sugar.

With physical presences in Jamaica, Bermuda, Cayman Islands, Barbados and Trinidad & Tobago, NCB hopes to establish in Guyana. Young said NCB has met with regulators and are working with them to be regulated.

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