New SSLVC owner looking towards private equity as business model
MICRO-FINANCING SOLUTIONS Limited, the new owner of SSL Venture Capital Jamaica Limited, SSLVC, will meet at the board level to discuss the operational direction of the shell company it acquired for $30 million.
The discussions are pointing to a shift towards private equity financing as the business model. Micro-Finance is also planning to rename the company as MFS Capital Partners Limited as a sign of the shift in focus and to align with the identity of the new owner.
The purchase of the 79.08 per cent interest in SSLVC through MFS Acquisition Limited on May 25 was followed a day later by the resignation of directors Zachary Harding, John Jackson, Christine Birch and Brent Ciurlino, as well as chairman Jeffrey Cobham.
The new board of directors comprises Leopold Nesbeth as chairman, as well as Dino Hinds, Robert Barnes, Christine Johnson Spence and Anika Jengelley.
An extraordinary general meeting has been scheduled for June 13 to get shareholder approval on the name change.
Micro-Financing Solutions Limited, which has been operational since 2014, started out as a microlender and licensed cambio, before expanding its operations into other areas of finance, including remittances, bill payment services and loans.
The company has even dipped its toes into real estate and, more recently, the private equity market, in which it plans to deepen its activities through SSLVC.
“We have refined our focus and it is primarily money services, real estate and private equity. That is why SSLVC fits into our business model,”Dino Hinds told the Financial Gleaner.
“SSLVC’s business model will change,” he added. “The company was more in the venture capital business, which is more focused on start-up companies, but we are looking more for fast-growing companies that are scaling.”
Hinds said the company already has its eye on potential acquisition targets, and was already assessing what elements of the Micro-Financing Solutions group it could restructure to bring under the ambit of SSLVC.
“Those are all possibilities. In a very short period of time, we will make announcements where that is concerned. But, of course, those are just ideas,”he said. “After our board has met, then we will decide what’s the best structure for the company,” he added.
Prior to the takeover, SSLVC was the venture capital arm of licensed securities dealer Stocks & Securities Limited.The company adopted that business model in 2018 after a reverse takeover by Stocks & Securities. It was initially a music publishing company called C2W Music Limited.
Over a decade of losses racked up by SSLVC, its accumulated deficits mounted to $358 million in March 2021, but climbed back down after a deal was struck to dispose of the final drag on its finances.
As of March 2022, however, SSLVC was still sporting accumulated losses of $149 million and negative equity of $53 million. But Hinds would not say what plans Micro-Financing Solutions had to recapitalise the new holding.
As a venture capital financier, SSLVC acquired stakes in three start-up companies, Muse 360, Bar Central and Bluedot Insights, back in 2018. But all three investments fizzled over time.
In 2020, SSLVC shuttered Muse 360 and Bar Central, and put its stake in Bluedot up for sale. After one failed attempt to sell its final holdings back to founder Larren Peart, a deal was struck between them again in 2021, leaving SSLVC as a shell operation.
Hinds defended the plan to continue as an equity investor, despite SSLVC’s track record of failure.
“Both venture capital and private equity ventures can be done quite successfully. What is important is how you choose the companies that you enter into, and ensuring that those companies have a strong management team,”he said.
“The companies that we will be targeting are at a different stage in their life cycle than those SSLVC invested into.”