Proceeds destined to grow its loan portfolio

Durrant Pate/Contributor

Jamaica-based regional micro lender, Dolla Financial Services Limited is returning to the local capital market to raise J$1 billion through a bond issue.

This latest capital raise come less than two months after a similar capital raise through an initial public offer (IPO) of shares for J$500-million, which was heavily oversubscribed by approximately 950 per cent, pulling in subscriptions of more than J$4.76 billion.

VM Investments Limited, which arranged the IPO, is also arranging the bond issue having recently been contracted by the micro lender as its financial advisor.

Dolla Financial Services, which trades under the name DOLLA, has locations in Jamaica and Guyana.

DOLLA has advised that, at a meeting of its Board of Directors held on July 15, 2022, approval was granted for the company to raise up to J$1 billion in bonds.

The bonds are to be registered under the regulatory of bond issues, the Financial Services Commission’s Exempt Distribution Guidelines. They are to be issued in Favor of Accredited Investors, as defined in the guidelines or to investors participating via the Minimum Purchase Amount exemption stated in the guidelines.

Use of proceeds

When contacted by Our Today today (July 20), DOLLA’s CEO, Kadeen Mairs, disclosed that “the proceeds of the bond issue will go towards growing the loan portfolio. The intention is to double the loan portfolio within six to nine months”.

The loan portfolio recently crossed the J$1-billion threshold and the intention is to grow that to J$2 billion.

According to Mairs, “….it is fair to assume that earnings will also double. So basically at this point pre-tax profit at the second quarter is J$132 million, which is over 360 per cent increase year-over-year on profits.

He also commented on the quality of DOLLA’s loan portfolio, which has significantly been increase, pointing out that over 70 per cent of loans have been secured by property and motor vehicles as assets. This has brought DOLLA’s Expected Credit Loss down to five per cent.