The much anticipated Additional Public Offer (APO) of shares in alternative investment company, Sygnus Credit Investments (SCI), which is seeking to raise upwards of J$3.3 billion, opens next Friday, December 18.
The APO prospectus, which was released today, indicated that the company is offering 196,372,431 ordinary shares in two classes a Jamaican dollar share subscription and a US$ share subscription amounting to US$22-million. The company has reserved the right to upsize the offer by an additional amount of 82,271,772 bringing the total subscription to J$3.3 billion.
The price per share for the general public is US$0.14 per US$ share and J$16.30 per J$ share while there will be a discounted share price for existing shareholders and team members of US$0.127 per US$ share and J$14.70 per J$ share. The closing date for the APO is December 23, 2020.
The lead arranger for the APO is Sygnus Capital Limited while Sagicor Investments Jamaica and NCB Capital Markets will act as joint lead brokers. In a statement accompanying the prospectus, SCI Chairman, Clement Wainwright Iton said the proceeds from the APO will be used for pipeline investments and growing the businesses.
Dry-powder capital being sought from APO
“In order to accomplish these tasks, SCI needs to raise additional dry powder. Thus, the APO represents a key initiative on a multi-step journey within alternative investments to deepen and expand the Caribbean private credit ecosystem,” Iton advised prospective and existing shareholders.
Iton pointed out that SCI is not only a pioneer, but is a leader in the Caribbean private credit market noting that over the past three and a quarter years, the company has deployed more than US$100 million in financing diversified across 36 businesses, 11 industries and 7 Caribbean territories.
SCI used its first three years of operations to develop its private credit track record, build key partnerships with institutions and investors and develop regional middle-market business relationships.
This, Iton declared has laid a solid foundation for a sustainable business model. He said within the next two to three years, SCI’s strategic objective is to enhance shareholder value by scaling its business to exceed US$100 million in portfolio investments and generate more than US$8 million in core revenues.
As such, SCI will be taking advantage of a robust risk-adjusted pipeline of opportunities while supporting and protecting existing portfolio investments. SCI’s most recent audited financial results for the financial year ended June 30, 2020 highlights some key achievements.
Portfolio investments surpassing US$50 million
Among the key achievements is the company’s portfolio of investments surpassing the US$50 million threshold for the first time, while generating a record US$4.5 million in total investment income and US$1.97 million in net profits, which was 3.8% less than the prior year record of US$2.05 million. Since its initial public offering in May 2018, SCI has returned US$3.8 million or 10.9% of share capital to shareholders in the form of dividends.
In only two years, SCI has delivered on its promise to pay out up to 85% of net income in dividends. SCI’s most recent financial results for the first quarter ended September 30, 2020 are even more encouraging.
Net profits grew 51.1% to US$797.8 thousand, total investment income grew 19.8% to US$1.3 million, and portfolio investments grew 116.9% to US$62.3 million.
Proactive risk management
Another notable achievement is SCI’s ability to proactively manage credit risk in its private credit portfolio. SCI’s portfolio companies have demonstrated resilience thus far, with non-performing investments currently at 2.3%, which is below the 5% limit threshold.
More importantly, the alternative investment company had zero realised losses on its private credit investments, a feat it has maintained since inception.