Sygnus Credit yet to value new acquisition Acrecent
Published:Sunday | January 21, 2024 | 12:08 AM
Smarting from a first-quarter dip in some performance metrics and waiting on the opportunity to fully bring foreign subsidiary Acrecent on to the books, Sygnus Credit Investments Limited has hit the reset button on company goals in the near to medium term.
Sygnus Chief Investment Officer Jason Morris told shareholders at the credit investment company’s annual general meeting that the company is next aiming for top-line income of US$55 million in a year to 18 months. It delivered interest income of US$12.6 million and net revenue of US$9.77 million last financial year ended June 2023.
Despite the fact that Sygnus currently owns 95 per cent of Puerto Rico-based Acrecent, that business has not been brought fully on the books as the fair -alue assessment is incomplete. Morris says this is due to the fact that the valuation is market-driven.
“We have to do a fair valuation of it based on market multiples, and we are using the US stock market to do our valuation,” he said.
“Unfortunately, at the end of September, the Fed [US Federal Reserve] went on a rate-hiking spree, and rates went up five and a half per cent. As the rates go up, that affects the value of an asset we’re carrying,” Morris added.
The exclusion has been impacting Sygnus’ financial results, especially for the first quarter ending September 2023, he said.
Sygnus Credit’s total investments in portfolio companies stood at US$128.23 million at the end of September, up 22.2 per cent on the estimated value in 2022. Morris noted that the total investments exclude the US$24.3 million that is invested in Puerto Rico Credit Fund.
He says as part of the company’s short-term strategy, it will be seeking to grow the business at “Acrecent very rapidly oner the next 12 months”. To do this, Acrecent will be doubling down on its impact-investing strategy, where financing is directed to areas such as financial access to overlooked businesses, quality healthcare, affordable housing, and rural and urban development to impact the hospitality sector.
Sygnus Credit delivered US$8.89 million in total investment income for the financial year ended June 2023. This was 7.8 per cent up on the US$8.25 million. For the first quarter ended September, the company delivered just under US$745,000 in net profit, a sharp 54.2 per cent decline from the US$1.63 million for the similar period in 2022. Net investment income was down 50.5 per cent to just under US$543,000.