Sygnus profit shaved by impaired investments
Published:Wednesday | September 10, 2025 | 12:05 AM
Alternative investment company Sygnus Credit Investments Limited, SCI, suffered a 29 per cent contraction of its bottom line at the end of its financial year June, amid write-offs of impaired investments.
Sygnus Group’s Chief Investment Officer, Jason Morris, said the downturn in profit was largely due to one-time charge-offs, increased impairment charges, and unrealised fair value losses. Profit slipped from US$6.03 million to US$4.28 million.
During the year, one of the bright spots for the company investment income, which climbed by more than 50 per cent to surpass US$15 million, driven primarily by the performance of Sygnus’ Puerto Rico-based subsidiary Acrecent Financial LLC, which reported profit of US$4.67 million.
“Since July 1st, 2023, fully two years, we went through a transformation of the Puerto Rico business, which has an incredible management team. That business generated in total, net profit over the two-year period of US$8.85 million, which is a big feat,” Morris said.
“That business has been transformed and it’s just the beginning …,” he said. Sygnus acquired Acrecent, a private credit firm, in December 2021.
One of the big-ticket items squeezing earnings was impairments of US$3.44 million, which was more than times the previous year’s allowance and driven by charge-offs and adjustments related to Sygnus’ portfolio companies. Sygnus is a provider of private credit to businesses.
One of the charges, a write-off of US$195,900, related to a portfolio company in the construction industry. Morris said Sygnus Investments recovered all of its US$1.34 million original investment in the company, as well as interest, after working out a structured payment solution that resulted in the US$195,900 write-off.
“The portfolio company was previously classified as a stage two investment requiring higher impairment allowances. The amount charged off was included in the current impairment allowance as a one-time non-recurring charge,” Morris said.
In addition, he said, US$1.26 million was written-off for another portfolio company after Sygnus took possession of collateral during the quarter ending March and disposed of during the fourth quarter ending June. The portfolio company was previously classified as a stage three investment with a higher impairment allowance.
SCI also increased the impairment allowance for one portfolio company by US$2.51 million in the fourth quarter, following a request by the portfolio company to restructure its private credit terms, Morris said. That company has since been reclassified from stage one to stage two during the fourth quarter.
Stage two classification is based on lifetime expected credit losses, which are significantly higher than stage one investment, which utilises a 12-month estimate, Morris explained.
“We took the decision to change the classification from stage one to stage two because the portfolio company actually proposed a business strategy that required some proposed changes to the terms of the private credit instrument,” he said.
Sygnus Investments’ total non-performing investment ratio closed the financial year at 0.6 per cent, down from 0.8 per cent in 2024, well within the industry standard of five per cent.