Sygnus Credit going after more regional investments
Published:Friday | September 3, 2021 | 12:09 AM
Sygnus Credit Investments Limited, SCI, is bullish about hitting its growth targets, having in one year managed to expand its assets by 44 per cent, putting the company in reach of its goal of US$100 million in total assets earlier than expected.
The company is currently chasing deals in the Caribbean, which it expects to both reduce, but not eliminate, Jamaica’s dominance of the investment portfolio, and position the company to hit its US$100-million milestone.
At year ending June 2021, SCI’s assets were estimated to have grown by US$27 million to nearly US$88 million, less than US$13 million shy of its asset target, which it initially expected to reach by late 2022 into 2023.
“We are clearly well ahead of that timeline. This shouldn’t be a surprise because we hold dear the philosophy that during a crisis, that is when the demand for flexible capital is greatest,” said Jason Morris, chief inveestment officer for Sygnus Capital, the company that manages Sygnus Credit.
SCI offers credit financing to companies and currently holds a large pool of funds for investment – referred to in industry-speak as ‘dry powder’ – that Morris says is available for deployment to well-run companies that want to outlast crises such as the COVID-19 pandemic.
“Traditional financing is not necessarily the best prescription to generate the pace of growth that these companies want. It is really alternative financing that can unlock the value in these companies and spur growth,” he said.
The company has US$10 million in revolving credit as well as US$39 million of dry powder ready for investment, more than enough to surpass the US$100-million asset target, assuming it secures financing deals to deploy the funds.
Massive profit increase
For the 2021 financial year, Sygnus Credit more than doubled profit from $1.9 million to US$5 million, its best showing since listing on the market four years ago. Net revenue climbed from US$4.5 million to US$7.9 million. Total assets grew from US$51 million to US$88 million, while SCI’s book value, or capital base, also expanded from US$37 million to nearly US$67 million.
As to whether the company expects to better its profit performance in FY2022, Morris was cautious in his response. “There is not much that I can say, except that we expect no less than what we did in the last financial year,” he said.
The largest share of Sygnus’ portfolio investments, 50 per cent, is deployed in Jamaica. It’s also invested in businesses in St Lucia, Barbados and the Dutch Caribbean subregion. The company plans to do more investments in the Caribbean this year, which Morris said should lead to a reduction of the Jamaican share to under 50 per cent of the total portfolio.
“As to when you will see that (percentage) fall, I cannot predict, but it will definitely happen. For now, it remains at 50 per cent year-over-year, because Jamaica is the most vibrant capital market in the region and there was a high degree of aggressive entrepreneurial activity. This will continue, but we are now pursuing multiple transactions outside of Jamaica,” he said.
Sygnus is looking towards Cayman Islands, the Dutch Caribbean and other locations for a surge in business.
“You’re going to have a lot of pent-up demand exploding out of those territories, having been locked down for so long. The rate of demand for capital and the speed of growth will be phenomenal,” Morris said.