Micro Financing Solutions aiming for 10 branches in two years after acquisition by MFS
NOW THAT MFS Capital Partners has fully acquired 100 per cent of Micro Financing Solutions Limited, the new owners have set a target to triple the microlender to 10 branches in two years.
MFS Capital CEO Dino Hinds says the transaction, which was first announced at the end of 2022, was finalised ahead of MFS’third quarter which ended in March. The cost of the acquisition was not disclosed. MFS formerly traded on the market as SSL Venture Capital Jamaica but rebranded after the majority takeover of that loss-making business via a vehicle called MFS Acquisition.
With the Micro Financing Solutions deal now finalised, Hinds says MFS Capital will be moving ahead with a rights issue to raise fresh capital for its expansion. The company is yet to select a broker for the transaction. Rights issues are generally confined to raising cash from the existing owners of a stock, but some transactions allow for conditional public participation through what is referred to as a renounceable offer.
Hinds said the board has authorised the company to seek up to $380 million from the market .
“We have other things that we’re working on that will definitely grow both Micro Financing Solutions at a fast pace; plus grow the number of portfolio companies that MFS Capital has,” he said in an interview with the Financial Gleaner.
Micro Financing Solutions will continue to steer away from microlending and move towards private credit as its core business. The latter presently makes up 20 per cent of total revenue, but the company is aiming to rebalance the portfolios over the next 18-24 months, Hinds indicated.
The aim is to reposition Micro Financing Solutions as a private credit provider, and to have MFS Capital be its holding company, he said.
Micro Financing Solutions is a Kingston-based money services company that began operations in 2010 as a microlender, then later venturing into other areas of finance, including foreign exchange trading, remittances, bill payment services and private credit.
It currently operates two locations in New Kingston and one at Three Miles, near the Portia Simpson Miller square. Another branch is pending approval. It will operate from Windward Road near the intersection with Mountain View Avenue.
Hinds said the siting of branches at Windward Road and Three Miles was deliberate, saying the company wanted to take advantage of the heavily trafficked areas to deal with remittances. The two areas are in proximity to volatile communities.
The company’s only full-service money shop is located in New Kingston at the Small Business Association of Jamaica premises at the corner of Trafalgar Road and Lady Musgrave Avenue.
The Three Miles branch offers bill payment and remittances services, as will the pending Windward Road outlet. However, Hinds also said the product mix offered at each location is under review, and that over time thought will be given to adding cambio or foreign exchange trading services at Windward Road, since, outside of National Commercial Bank, no other money services company operates in that area of Kingston.
The acquisition of Micro Financing Solutions is the first big transaction executed by MFS in the wake of the takeover of private equity investor SSLVC in 2022. The company is also trying to dispose of its holdings in Bar Central Limited and Muse 360 Limited, two inactive subsidiaries it acquired with the purchase SSLVC.
Micro Financing Solutions will now be the flagship operating entity in MFS Capital Partners’ portfolio, Hinds said.
Regarding the company’s expansion strategy, he said the the company would grow the network to 10 branches nationwide by acquiring smaller loan companies that operate in other parishes, financed by $150 million of the equity capital to be raised. The rest of the proceeds will grow the company’s loan book.
“We prefer to acquire a smaller company and operate from that space rather than to start from scratch with a new branch, new staff, and that much more in spending,” Hinds said.
Meanwhile, board changes are pending Micro-Finance Solutions. Sadie Bogle will exit the former two-person board and make way for three other un-named persons who are also directors of MFS Capital Partners Limited.
Hinds only identified himself as one of the three. The others are undergoing fit and proper checks by regulators, he said.
Once the approvals have been granted, MFS Capital and Micro Financing Solutions will end up having three directors in common.