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Portland Caribbean Fund to add two new investments by year end

Published:Wednesday | July 11, 2018 | 12:00 AM
Directors of Portland JSX Limited, Patricia Francis and Robert Almeida, converse at the company's annual general meeting that was streamed from St Lucia to Jamaica Pegasus Hotel in New Kingston on Wednesday, July 11, 2018.

Portland Caribbean Fund II, PCFII, expects to make two additional investments this year, worth US$20 million combined.

The fund, controlled by investor Michael Lee-Chin's Portland Private Equity firm, expects to make investments in companies which make consumer products.

One target is located in Central America and the other in South America, said managing partner in Portland Private Equity, Robert Almeida, following the annual general meeting of Portland JSX Limited, a limited partner company in PCFII. The meeting was held in St Lucia but also streamed to The Jamaica Pegasus hotel in New Kingston.

'The fund would invest US$10 million in each company," Almeida said., but declined to name the entities, citing ongoing negotiations.

The investments would make the ninth overall by PCFII. The fund was set up to invest US$200 million in medium to large regional businesses, and the two additional investments this year would result in 80 per cent deployment. As a general rule, the fund seeks to invest in companies worth a minimum of US$15 million in total capital.

The managers aim to convert every dollar into two dollars over the life of the fund, said Almeida.

PCFII is now in its fourth year. Within the first three years of the life of the fund, the aim was to invest more than 50 per cent of the money, then look for more ''opportunistic'' deals in the latter years.

The focus now is on transitioning the businesses to growth by implementing business-improvement strategies. Then in year seven, Portland will start to ''harvest'' and then monetise the investments.

''Options include IPOs, selling the stock and/or refinancing, so we can create cash to distribute," said Almeida.

PCFII was capitalised with funds from a cross section of development financing institu-tions, pension plans, and insurance businesses. The fund is diversified in terms of geography, sector and size of the company. Sectors include telecommunications, energy, and financial services.

Its geographical mandate covers the Caribbean Basin a region that includes the Caribbean, Colombia, and Central America.

The investments to date include Diverze, at least US$10 million; CVBI, a company associated with Liberty Global, US$30 million; IEH Penonome Holdings, US$15 million; Clarien Group Limited, US$10 million; InterEnergy Holdings, US$25 million; Grupo IGA, US$17 million; and Productive Business Solutions, US$15 million.

During this year, the fund upsized its investment in Diverze from around US$8 million to US$10 million, Almeida said. Diverze holds a 40 per cent stake in Chukka Caribbean Adventure Limited; 100 per cent of Tropical Batteries Company Limited; and 100 per cent of Diverze Properties Limited.

The hurricane activity in Puerto Rico nullified strong results in Chile and Jamaica in the year for Liberty Latin America, according to Almeida. Liberty Latin America is the combination of Cable & Wireless Communications and Columbus International.

''Unfortunately, from a value perspective, Liberty Latin America is not doing well on a value perspective as we would like, mainly due to the two hurricanes that hit Puerto Rico last year. It pretty much wiped out Liberty Latin America,'' he said.

The fund holds a stake in a wind farm in Panama, IEH Penonome Holdings, which was fully built but faced issues with low wind due to weather, said Almeida.

''So it hasn't done as well as expected to date. We expect the weather pattern to change going forward,'' he added.

Clarien in Bermuda, which has a medium-term strategy to expand regionally and beyond, performed well.

''The strategy includes using Bermuda as a platform from which to grow a network of global network of private banking, which would include Cayman and potentially [locations] on the other side of the world," said the Portland partner. PCFII invested in the form of a loan and collected all of its interest, then converted that loan into equity.

In Colombia, the group holds a stakes in a chain of restaurants, including the Andres, which plans to open two more locations in Medellin and Barranquilla, bringing the total to four large restaurants. The deal took the form of equity and debt participation in the creation of a new entity known as Grupo IGA, resulting from the merger of Inmaculada de Guadeloupe y Amigos CIA and Grupo Conboca. It includes restaurant brands Andres Carnes de Res, Kokoriko and Mimo's.