Sygnus Real Estate Finance Limited is coming to the capital market this week with an Initial Public Offer (IPO) seeking to raise upwards of four billion dollars in capital.

The company, which is the real estate financing arm of Sygnus Finance Group is offering up to 207.6 million ordinary shares in the company  for a target capital raise of J$3.9 billion, subject to the right of the company to upsize the offer up to a further 38,857,193 ordinary shares bringing the capital raise by in excess of additional $500 million.

The IPO opens this Friday July 23, 2021 and will close on August 20, 2021. An application has been submitted to the Board of Directors of the Jamaica Stock Exchange (JSE) for all the shares to be listed on the Main Market of the Jamaica’s Stock market. The shares on offer are divided  in two classes (J$ Shares and US$ Shares).

The subscription price  is J$19.30 per J$ Share and US$0.1270 per US$ Share for the general public. However, a discounted price of J$17.90 per J$ Share and US$0.1170 per US$ Share is applicable for existing shareholders and team members and J$18.30 per J$ Share and US$0.1210 per US$ Share for key investors. The lead arranger is Sygnus Capital Limited while the joint lead brokers are Sagicor Investments Jamaica and Scotia Investments Jamaica.

Key milestones and successes Sygnus Real Estate Finance

Over the past 19 months the company has had a string of successes such as its deployment of an estimated J$5.65 billion across a total of 12 investments since inception in Jamaica, which was its initial focus of investment capital. This is more than 2.5 times the company’s initial share capital of J$2.0 billion.

Board Chairman Clement Wainwright Iton argues, “This highlights the creative use of its capital base to acquire key strategic assets and extend flexible financing to real estate projects at a time when all economies need private sector capital to be put to work.”

In his forward to the prospectus, which was released on Friday (July 16), Iton noted that Sygnus Real Estate Finance recently broke ground on its first development investment and expects to break ground on its second development investment within the next 30 to 60 days.

The two projects have a combined value of approximately J$4.05 billion: an industrial project on Spanish Town Road and a commercial project on Belmont Road. The company also recently completed the acquisition of two other key strategic properties, post its 6 months financial results, with a combined estimated balance sheet value of J$2.9 billion, thus strengthening its potential future project pipeline.

Sygnus Real Estate Finance latest financials

Sygnus Real Estate Finance most recent audited results for the financial year ended August 31, 2020 showed that the company generated J$466.8 million in total investment income and J$414.9 million in net profits for the financial year with total assets of J$6.08 billion. The company’s most recent financial results for the 6 months ended February 28, 2021, are even more encouraging. Net profits grew to J$949.9 million, and total investment income grew to J$1.03 billion, driven by the significant unlocking of value in its property investments.

Another significant highlight is the increase in shareholder value: the net proceeds of J$2.08 billion raised in a private placement in August 2019 grew 69.8 per cent to J$3.60 billion.

Future path for the company

Within the next two to three years, one of Sygnus Real Estate Finance’s four key strategic objectives is to unlock additional value from its major strategic property acquisitions, which contain significant upside opportunities. The company chose to focus first on the Jamaican real estate market given what it believes is a better risk to reward ratio on its investment capital.

According to the company chairman, “the quality of the assets on SRF’s (Sygnus Real Estate Finance) books is evidence that this was the best path for the Company to take when it made that decision. In order to invest the capital required to unlock the additional value in these assets, and accomplish its other strategic objectives, SRF needs to raise additional Dry Powder.”

In concluding, Iton made the point that, “this initial public offering represents a key initiative to unlock this value and assist in financing its robust pipeline of at least J$5.5 billion over the next 18 months.”