Sygnus’ Xmas APO to pay down debt, build cash for investment
Published:Wednesday | December 16, 2020 | 12:09 AM
Sygnus Credit Investment Limited is headed to the market this Friday seeking US$22 million through an initial public offering of shares, or APO, which it is prepared to upsize to US$32 million if demand warrants it.
The funds will give the company capital for deployment as it seeks to grow its portfolio of investments by 60 per cent, according to CEO of Sygnus Capital Berisford Grey. Sygnus Capital is the management company for Sygnus Credit.
“Starting with this upsizeable offer, our goal is to grow the portfolio to US$100 million in the next 24 months,” Grey said in an interview on Monday. A good portion of the funds, US$10 million, will also be used to pay off a bridge loan.
Sygnus Credit offers credit financing to targeted companies across the region. The company formed in 2017 and listed on the Jamaica Stock Exchange after an initial public offering in 2018, currently oversees a portfolio of US$62 million, with its investments spanning 11 economic sectors in seven Caribbean countries.
The APO of Jamaican and US dollar shares is priced at $16.30 and US$0.14, respectively. Existing shareholders on record as of November 20 and staff will pay a discounted price of $14.70 and US$0.1270 per share. Over 196.37 million units are on offer for subscription over December 18-23, just ahead of Christmas.
The APO will not get Sygnus to its goal of US$100 million. It will still need around U$16 million to US$26 million to hit the target. But Grey said he does not want to raise more funds now than the company’s business leads suggest they need at this time.
“Although dry powder is important to our business, we try not to raise too much capital at once since it may create a drag. We raise it based on the demand that we’re seeing because we want to deploy capital in a very deliberate way, thus always maintaining a good return for our investors,” he said.
Sygnus has US$40 million of pipeline projects waiting for investment, with half of that currently approved.
“The key strategy is to balance the dry powder that we have with the investment opportunities so that we don’t have a cash drag that will suppress returns,” he said.
As to the investments already in its portfolio, Grey said Sygnus is working closely with client companies to help guide them through the pandemic, including giving advice on cash management and where necessary helping companies to acquire smaller, failing companies, to take advantage of emerging opportunities.
“There are those that we assist with additional capital to exploit acquisition opportunities because of their strength and leadership. There are those for whom we provide working capital support to preserve their infrastructure,” Grey said.
“The good thing is that we are seeing a lot of green shoots. There is optimism around a vaccine and the possible return of cruise ships. From our standpoint looking at the industry, the crisis did not hit as hard as we thought it would,” he added.