SSL reorganises, sells stake in Dolla Financial to Haitian firm
Published:Thursday | April 26, 2018 | 12:00 AM
A small Haitian private equity investment firm, Caribbean Investor Capital (CIC), has bought a minority stake in Dolla Financial, a microcredit business that up to late last year was a subsidiary of Jamaican securities dealer Stocks & Securities Limited (SSL).
In a reorganisation said to have taken place late last year, Dolla Financial became the sister company to SSL Jamaica, which is run by new CEO Lamar Harris; and both Dolla and SSL Jamaica are now subsidiaries of Stocks and Securities (Barbados) Limited, which is headed by former SSL CEO Mark Croskery.
Croskery now heads the Barbados-based parent company as executive director, focusing on the group business.
The precise percentage holding transferred to CIC was not disclosed, but the Haitian company paid $62.5 million for the acquisition and has been given two seats on the board of Dolla Financial. At least one party to the deal said the transaction did not require approval by Jamaica's regulatory authorities.
The move is part of the strategic positioning and foray of SSL into the regional investment market, where it intends to leverage all lines of the group business for expansion into the Caribbean.
The deal extends the investment reach of the Haitian equity firm into the Jamaican market, even as it provides Dolla with an opportunity to grow its microcredit business beyond Jamaica, according to Dolla Financial CEO Kadeen Mairs.
"While the vision of other financial institutions is to be the leading provider of financial services in Jamaica, Dolla has its eyes on the Caribbean - in the short term, Haiti," Mairs said.
Stocks & Securities' track record in the Jamaican financial industry and its regulation by financial sector authorities were important factors in CIC deciding to place their money in SSL's microfinance business, the principals of CIC have said. CIC's principals include Chairman Gerald Wight, an investment banker who also serves on the board of Haitian investment bank ProFin; board secretary Robert Paret Jr, a career banker, chairman and CEO of ProFin; and CEO Guy Balam, an investment adviser by profession.
Wight and Balam are representing CIC on the Dolla board and attended their first board meeting at SSL's Hope Road, Kingston head office last week.
"As our first investment in Jamaica, we looked at several opportunities and selected Dolla. Apart from the business being a division of a highly respected financial sector stalwart such as SSL, it is a regulated entity and therefore subject to regulatory scrutiny," said Wight via email to the Financial Gleaner.
He added that given the financial sector background of the principals of CIC, they were impressed with Dolla's governance structure, manage-ment team, diverse business streams - credit, foreign exchange, remittances - its growth potential with particular reference to the demand for credit, range of new microcredit products, and regional scope beyond Haiti.
CIC began operations in January 2017. Since then, the equity firm has raised about US$8 million.
Dolla Financial plans to use around 90 per cent of the sale proceeds to create a bigger pool for lending, with the remainder earmarked for marketing and bolstering its brand in the very competitive microcredit sector in Jamaica, even as it hunts regional opportunities.
"The directors believe that the company's target market for micro, small business and personal loans represents significant potential for growth," Mairs told the Financial Gleaner. "Dolla Financial Services' future plans are to expand beyond our six locations spanning Kingston to Savanna-la-Mar. We have invested in technology which will assist in reaching the 'little man' in remote areas of Jamaica to get funding for his business," he said.
Mairs concedes that the Haitian deal is the latest in a plan to raise more funds to sustain what he described as Dolla Financial's strong growth potential and to ensure that the company remains competitive. Options being explored include private fundraising, as well as publicly through "exempt distribution and/or an initial public offering through the Jamaica Stock Exchange". Exempt distribution refers to the issuing of securities without the need for an offer document or prospectus, and for which local regulations stipulate the minimum take-up as $10 million per investor.
Dolla Financial's parent, Stocks & Securities Barbados, is also echoing the regional ambition of the microcredit business. Croskery also confirmed that an IPO remained firmly within the sights of SSL.
"We are excited to bring CIC in as a partner and on the board of directors at Dolla. This investment and partnership justifies our investment as SSL Barbados, our private equity platform, in Dolla approximately three years ago, and now enhancing shareholder value for all parties under the leadership of Mr Kadeen Mairs as CEO, at Dolla," Croskery said via email.
"We look forward to seeing Mr Kadeen Mairs and the board take the company to the northern Caribbean, and potentially an IPO in due course," the SSL executive director added.
Mairs has been leading the SSL microcredit outfit since August 2016 when the securities dealer bought his two-year-old microcredit business, M24 Investment, that then served a small clientele in western Jamaica. M24 Investment was rolled into Dolla Financial and Mairs was tapped to lead the merged entity.