Sygnus seeking to double its investment portfolio to US$100 million
Successful APO crucial to this happening
Sygnus Credit Investments is seeking to double its us$50-million Caribbean investment portfolio over the next two to three years.
Regarded as the Caribbean leader in private credit investments (PCIS), Sygnus plans to grow its investment portfolio taking advantage of risk-adjusted pipeline opportunities in high-quality middle-market firms, where it expects to earn US$8 million per annum in investment income over the period.
These ambitious projections were outlined at the company’s recent extraordinary general meeting (EGM), where shareholders unanimously voted in favour of the company raising additional capital through additional public offering (APO) to finance its pipline investment projects. The investment portfolio will be grown by protecting and support existing portfolio company investments and working capital, the provision of acquisition financing as well as credit enhanced investments.
In addition, Sygnus will be paying down Us$10-million bridge notes thus reducing interest costs. Cutting debt will result in the alternative investment outfit being able to have greater access to the private debt markets and more efficient use of revolving credit facilities.
CRUCIAL APO
Overall the Jamaica-based private equity establishment plans to play leading role in financing the recovery and growth of middle-market firms in the region, which is dependent on a successful APO. The amount of money being sought from the APO was not disclosed and Sygnus Investment Manager Jason Morris and Chief Executive Officer (CEO) Berisford Grey were both tight-lipped on the matter even though being asked by shareholders.
All Morris was willing to say was that the amount will be known in short order when the prospectus comes out, which is by year end. The two resolutions passed at the EGM authorises the board and management of Sygnus to raise such additional equity investment through an APO on such terms and conditions as deemed fit.
Morris told shareholders that a successful APO should provide the company with “enhanced access to growth and recovery type financing and attractive risk-reward opportunities in trade finance, acquisition finance, asset-backed finance and infrastructure projects”. He said shareholders will benefit from dividend enhancement, “Base” dividends plus supplemental dividend given the forward plans outlined.
He conceded that COVID-19 has pushed back Sygnus, which was forced to exist before time from a St Lucian company involved in adventure tourism that it had an investment of US$10.3 million. This was done in the third quarter of 2020, while during the same period the investment company was forced to restructure a haulage company in the mining and quarrying sector, which it has a substantial investment.
The restructuring was due to the fact that the company projected to incur higher expected credit losses.
PROACTIVE COVID-19 MANAGEMENT
Morris pointed out that Sygnus was able to withstand the global pandemic based on its proactive management strategies and partnership approach with US$50 million in repeat business from a dozen portfolio relationships across five Caribbean territories.
According to the Sygnus investment manager, “combined with its proactive risk management and differentiated solutions will allow it (Sygnus) to continue being the leading source of PCI as the COVID-19 pandemic recovery effort gathers pace.”
He emphasised that the strategy also includes disciplined investment strategy as well as frequent and proactive engagement with executive management of portfolio companies in addition to shortterm assistance programs and collaborative longer-term enhancements where necessary.