1 month ago
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Sygnus Credit Investments Limited, SCI, aims to raise US$26 million in a new preference share offer to the market.
It forms part of plans by the firm to secure as much as US$100 million in funds over the medium term. The current preference share raise would take the company to US$75 million worth of preference shares on its books raised in a year.
“The company expects to receive the equivalent of approximately US$26.13 million from the perpetual cumulative redeemable preference shares after deducting fees and expenses,” Sygnus Credit said in its prospectus.
The preference share offer will be on the market from November 25 to December 12.
The offer is structured to raise $1.2 billion in local currency with the option to upsize to $1.6 billion, at 10 per cent interest per year, and up to US$20 million in another tranche at 8.0 per cent. The company plans to list the prefs on the Jamaica Stock Exchange.
The new issuance of perpetual cumulative redeemable preference shares aims to refinance US$11 million in existing debt and support future growth at the alternative investment company, which specialises in private credit as financing for businesses.
Some of the funds will be invested in credit instruments tailored for medium-sized firms across sectors like manufacturing, infrastructure and financial services, the company said.
“To assist with growing and expanding the business within the next three years, SCI is seeking to raise additional ‘dry powder’ in the form of preference shares. Thus, this perpetual cumulative redeemable preference share invitation represents a key initiative on a multi-step journey within alternative investments to continue deepening and expanding the Caribbean private credit ecosystem, with a particular focus on opportunities within the Jamaican economic space,” said Sygnus Credit Chairman Linval Freeman.
The company debt level is slightly below its US$72 million in capital, according to the chairman. That’s the case provided the US$49 million of preference shares currently in issue by SCI isn’t factored into the equation.
Freeman said the company’s aggressive growth could see its debt levels rise.
Sygnus Credit capital is 36 per cent of its US$198 million in total assets.
“In keeping with its sustainable business model, SCI will continue to maintain a robust balance sheet with debt to equity below 2.0 times, thus allowing the business to remain nimble and able to take advantage of opportunities that may arise in different market conditions,” the chairman said.
For its past financial year ending June 2024, SCI grew its net profit by 17 per cent to a record US$6.03 million. Total investment income grew about 14 per cent to US$10 million.
Sygnus Capital will act as the lead arranger for the preference share offer and JMMB Securities Limited as the lead broker.
“The group has entered the final stages of approval with one of its international financing partners to diversify its funding base, as it seeks to secure at least US$100 million in medium-term financing,” Sygnus in the prospectus.
The company indicated plans to seek out projects three times the size of its medium-term fund raise.
“As part of this process, SCI has collectively targeted at least US$300 million in new originations, and is already making good progress on this front,” the company said. That level of projects would eventually require additional financing to meet the demand, it added.
The company’s portfolio of investments grew 24 per cent to US$188 million FY2024, inclusive of a US$30-million fair value assessment of SCI’s investment in the Puerto Rico Credit Fund, up from US$25 million over the same period in 2023. This was due in part to SCI increasing its stake in the fund to roughly 96 per cent in December 2023, paired with the record deployment and profitability of Acrecent Financial Corporation, the wholly-owned Puerto Rico business held by the group.
Founded in 2017, Sygnus Credit, a Jamaican-owned company registered offshore in St Lucia, has grown to become a leading provider of private credit, that is, business loans issued outside of the traditional banking system. Over the years, Sygnus has raised significant capital through various methods. Additionally, its pipeline of projects continues to grow.
“Given the resilient growth of SCI’s private credit portfolio which has fuelled seven successful years of operations, SCI has already begun executing its strategy to continue scaling its private credit business from the solid foundation laid during these first seven years,” Freeman said.
Since its founding, the company has raised capital via the stock market on multiple occasions: an initial public offering of shares in April 2018; an additional public offering of shares in December 2020; a preference share offer in September 2022 that raised the equivalent of US$4.9 million; another preference share offer in December 2023, raising the equivalent of US$50.4 million; and the July 2024 issue of US$3.2 million worth of preference shares.
Sygnus Credit also has a 15-month revolving line of credit of up to $750 million with JMMB Bank.
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