Sharing the philosophy of wealth creation — The MoneyMasters story
Just before the collapse of American banking giants Lehman Brothers and Merrill Lynch would catapult a series of events including the subprime mortgage crisis and the Great Recession, a boutique investment firm called MoneyMasters Limited was formed in Jamaica, in February 2007.
At the prompting of industry colleague Michelle Bhoorasingh, Claudette Crooks decided to re-enter the world of investments and wealth management, after having sold a previously successful firm.
“At the time I had sold an investment company that I had previously operated to a Caribbean entity, and my non-compete period had passed, and Michelle was really the one who really asked whether or not I’d be interested into going back into the business, and we had a sit-down and I decided to get back in,” Crooks, now president of the MoneyMasters Group, recalled in an interview with Jamaica Observer.
Having rediscovered her “love and passion” for investments, Bhoorasingh and Crooks would later approach Dennis Hickey to add his expertise to the leadership of the company. Together they led the MoneyMasters team, which started out with five employees, including Crooks as managing director, Bhoorasingh as financial controller and Hickey with responsibility for marketing and client relationship
“I think I have a huge love and passion for this area and we, all three of us, then sat down to work through the dynamics of creating MoneyMasters Limited at the time, which was a single company for quite a while,” Crooks said.
Over the last 15 years, MoneyMasters has morphed from a single boutique investment firm into a group of financial services companies espousing the philosophy of wealth creation though the management of a diversity of asset classes. Though at its genesis MoneyMaster offered fundamental investment products such bonds, stocks and repurchase agreements (or repos), the company now offers a variety of instruments to its clients to maximise wealth creation including real estate and collective investment schemes (CIS).
Navigating the choppy waters of the global recession was no easy feat for the company, but Crooks admits that the challenges faced required deft hands and steely nerve. No doubt, with the combined experience of her colleagues, Bhoorasingh and Hickey, Crooks said the company maintained a solutions-oriented approach.
“The truth is, once you enter business you have to have the mindset that there will always be challenges. There will always be macroeconomic factors that are not favourable to the business and the key is to really look at how you mitigate those factors… you have to approach the whole business that you are in as a problem solver,” the MoneyMasters president shared.
Bhoorasingh, though, would eventually exit the business after some time.
Yet, the global recession could not compare to the difficulties of the Jamaica Debt Exchange (JDX) and National Debt Exchange (NDX). The former was the created in 2010 by the JLP Administration with the aim of helping Jamaica reduce its debt payments. As a result, the Government reduced the coupon rates as well as extended the tenor on most domestically issued bonds.
Four years later, in 2014, the PNP Administration would introduce a similar programme called the NDX.
Crooks pointed out that the debt exchanges were not only a challenge for investors who purchased bonds at discounted rates but also difficult for the brokerage house.
“If I’m to look back and say what period was the most challenging, it would have been the period of both the NDX and JDX, certainly, on the securities firm because a lot of us took some amount of losses during that period, so much to the extent that we actually had to pump in more capital [or] we had to ask the shareholders for more capital,” she explained.
Another challenge presented when the Financial Services Commission introduced The Securities (Retail Repurchase Agreement) Regulations, 2014. By increasing the minimum principal amount for repos, the regulation limited the number of persons that could invest in the instrument.
MoneyMasters in this regard created an alternate vehicle — it’s collective investment schemes. While a repo may be backed by a single government instrument, Crooks noted that the CIS is invested in a “basket of assets” that reduces the risk of losses.
The company has four CIS, three of which were introduced between 2018 and 2019. They include a fixed-income fund, growth fund and an equity fund. Earlier this year MoneyMasters introduced its fourth CIS, the Real Estate Fund. Crooks revealed to Business Observer that plans are in train to introduce three more in the coming year.
Introducing the CIS at the time signalled the company’s shift from a boutique investment house to an asset management firm.
“We didn’t start off [in] wealth creation but more on investment management than wealth creation or asset management. So, this has been a new strategic direction that we got into on our own in 2019 and with that, we changed the direction of the entity because as it stands now we have a slogan that says, ‘It’s all about ROI’, which is return on investment, and the focus there is really to look for wealth creation opportunities and then to take it back to our clients and say, ‘This is an excellent opportunity. Let’s look at it, whether it is in structured bonds or special purpose vehicle or whether it is through the CIS funds that we manage.'”
Crooks makes the distinction though that the Real Estate Fund is not to be confused with MoneyMasters Real Estate and Infrastructure Fund (MMREIF), which is a subsidiary of MoneyMasters Limited that uses special purpose vehicles such as structured notes to finance the acquisition of real estate properties. She pointed to the recent groundbreaking for the Vista Montego Bay Resort as one of the projects being financed by MMREIF.
“So we buy into the property, we aim to build out the units and then sell. So that’s the function of REIF, we participate in real estate assets, we then unlock the value and we then sell the asset and get the cash flow and then distribute to the shareholders of MoneyMasters REIF. So that’s one vehicle we do asset management through,” Crooks shared.
“We also have another asset in Kingston. We are not ready to discuss that one yet. It’s in the heart of Kingston and it’s a mix of commercial and residential. We tend to like the commercial build-outs and we are looking to partner with parties either in the real estate and infrastructure space as we see those two areas as growth areas in the Jamaican economy,” she continued.
In terms of infrastructure, the MoneyMasters president said the MMREIF is exploring opportunities in roads, sewage and water. In this regard, MMREIF may not need to acquire the property but will partner with its clients and developers in building out the infrastructure.
At present, MoneyMasters owns a 22 per cent stake in MMREIF with the other stakeholders being pension funds and other investors.
On this note, Crooks shared that the company is strong on partnerships in unlocking asset value.
“We believe a lot in collaboration. We believe that the market is big enough to co-exist, to work together to bring value to parties. So we are strong on partnerships, alliances, building relationships across the board and we are strong on working collaboratively with a number of parties. We want to be a very cohesive body in the financial market and the regulatory space we operate in,”
In fact, the company earlier this year signed an agreement with VM Investments Limited, which, Crooks said, “is the beginning of a new dispensation for MoneyMasters Limited”.
“We are looking to partner with other companies in Jamaica and across the Caribbean,” she added.
When quizzed further on the group’s regional aspirations, she said that partnerships was the best way to grow across the Caribbean since the company would already have the required infrastructure in its respective territory.
Another milestone the company has accomplished this year is the full acquisition of MoneyMasters Money Services — a cambio. Crooks disclosed that there are plans to expand the suite of offerings in that business line, with General Manager Andre Brown at the helm.
Speaking on the outlook of the company, the president reiterated plans for growth through partnerships. In addition, she said MoneyMasters Limited has embarked on the expansion of its digital footprint to increase its market share.
“Our primary focus is to incorporate technology to scale and optimise our operational efficiencies and boost client engagement,” she outlined.
Having increased its net profit margins to 42 per cent in 2022, Crooks and her team have received a mandate from the board to increase that ratio to over 50 per cent in 2023. This, she said, will include making use of the group’s pension licence as well as exploring private equity financing opportunities.
“We were in a number of different lines and we simply reduced the amount of lines that we were involved in. So we pared the business down to about four lines and then we had a lazer-focus on those four lines. For us, being able to focus on our high net profit lines became important. Then recognising where we are within the industry — we’re not a big player, but whatever we do, we want to do it very well, and employing that strategy has augured well for us, for our growth now and our continued growth,” Crooks told Corporate Profile.
When asked about listing on the Jamaica Stock Exchange, she hesitantly indicated that it “could be an option”.
“We are a very inclusive entity, so at the right time we’ll have those types of conversations and we will extend the invitation. It’s something that we’re very positive towards because we recognise the importance of the distribution of wealth across an economy and one of the ways of doing that is to allow persons to participate in ownership of companies. So MoneyMaster is not against that philosophy at all,” she continued.
MoneyMasters Limited currently employs approximately 25 people. The company plans to increase its staff complement to 38 in the coming year.