Saturday, July 20, 2013

Why I'd Stay Away From the FCB IPO

Trinidad and Tobago's First Citizens Bank is set to launch its IPO  and although everyone is lining up to purchase its shares I personally would be very weary as an investor to be unequally yoked to the government. Simply because; the state and the private sector's motives are diametrically opposed. 

The private investor on one hand has a genuine profit motive whereas politicians and bureaucrats are interested in expanding their control and their respective budgets at the expense of efficiency and profitability. This is not a marriage that will end well for at least one of the parties. 

You cannot expect to get into bed with the government and not expect to pick up the government's diseases. The symptoms of these diseases which are already well entrenched in FCB's culture include inefficiency, corruption, nepotism , poor service and mismanagement. These symptoms do not auger well for profitability and stability in the long run.

Although investors may feel frustrated by the limited investment vehicles available in T&T, they should not settle for the tallest midget in the room but rather opt for a totally different sphere in their quest for investment options. 

4 comments:

  1. A classic example of the above is National Flour Mills (NFM) where they absorb increases in grain costs and are not increasing consumer prices because of the adverse impacts on the public and the negative fall out politically that would occur.

    The directors / management are therefore seeking the public's / the politicians interest at the expense of shareholders.

    Great article: Minority shareholders lose out in state companies

    http://www.guardian.co.tt/business-guardian/2013-01-17/minority-shareholders-lose-out-state-companies

    ReplyDelete
  2. Excellent article. TCL is another classic example. People bought shares at 13 dollars. They are getting no dividends for the past few years. The CEO takes shelter behind stock market crash in 2008. Never says a word about the workers strike at TCL and govt interference. Now the share price is around one dollar. There are other examples as well.

    ReplyDelete
  3. Kindly like and share the facebook page below to make a difference
    https://www.facebook.com/myfcbipo

    ReplyDelete
  4. You're comparing two different businesses both with its own divergent culture and differences. Your analysis is flawed in that regard.

    ReplyDelete

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