Microfinance Group offers to buy SSL Ventures for $38m

Listed junior market company SSL Venture Capital Jamaica Limited, SSL Ventures, has received a takeover offer that could see the acquiring party purchasing 100 per cent shareholding in the company, in a deal expected to close in early April. The transaction holds the prospects of a much-needed cash injection for the SSL Group and will likely draw the line under the group’s foray into providing venture capital financing for start-ups.

It emerged at the weekend that the St. Lucia-registered Microfinance Group, led by businessman Dino Hines and controlled by the entrepreneur trio of Hines, Robert Barnes and David Weir, has made a less than ten cents per share bid for SSL Ventures’ 400 million shares that places a book value just shy of $38 million on the cash-strapped company.

SSL Ventures reported to the market earlier this month total assets of $24.8 million when it released its first-quarter results for the period ending September 30, 2021, which was $2.2 million more than its year-end results at June 30. Net profit for the quarter was declared at $3.2 million. With no active operating company in the portfolio for the reporting period, SSL Ventures did not earn any revenue for the quarter. In the first three months of the previous year, it earned revenues of $18.5 million.

The offer of $0.0948 per share or $37.9 million for the company appears not to place much store on the $512 million market capitalisation based on SSL Ventures’ $1.28 close after trading on the Jamaica Stock Exchange Friday, a 30 cents appreciation on the 98 cents for which it traded before.

Hines told the Financial Gleaner at the weekend that he will not be commenting further until the process is completed. Microfinance Group started out as a cambio some seven years ago but has since diversified into micro lending, investment services, remittance and real estate services.

Chief Operating Officer of SSL Ventures Anthony Dunn would only say of the deal that the company received a written offer on January 17. This is just months after it sold its remaining 30 per cent stake in Bluedot Insights, a data intelligence firm. Bluedot was the last active company for SSL Ventures, which had acquired three start-up companies immediately after it restructured as a venture capital firm following a reverse takeover of failed music publishing outfit C2W Music Limited in 2018.

“SSL will return to its core business, which is wealth management and brokerage. The idea of supporting entrepreneurs was a good one, but it was difficult to get these companies to come under the structure of a listed company,” Dunn told the Financial Gleaner on Friday.

Its other start-up companies were Muse 360 Integrated Limited, a full-service marketing agency and content-production company in which SSL Ventures held 51 per cent interest, and Bar Central, a distribution and branding company servicing the spirits and beverage industries in which it owned a 75 per cent stake. Muse 360 was shuttered in August 2019, and Bar Central’s assets were sold and the operation shuttered in December 2020.

SSL Ventures had been operating as a shell company since June 2021.

“We were always letting the market know that we would consider options that would ensure shareholders’ value is preserved. From we decided to restructure the company and lock down the active companies, our aim after that was to ensure that whatever actions were taken, it would be to the benefit of shareholders,” Dunn said on Friday.

He did not disclose the details of the transaction, including the name of SSL Ventures’ potential new owner or the plans for the business thereafter, but he estimates that the deal could close within the next 90 days.

“We are following the rules for takeovers by the JSE (Jamaica Stock Exchange), so we have to go through all processes before we can make any further announcements on the details of the offer,” he added.

The company’s management was upbeat in its statement on the outlook for the business when its latest financials were released to the market on June 7, signalling that fresh cash was on the horizon.

“The board and executive management continue to consider possible solutions to the present difficulties, but whilst the opportunity does present itself for a fresh injection of capital based on the restructured balance sheet, the lingering uncertainties of the COVID-19 pandemic remain problematic for potential investors. In its quest for a solution, the board continues to keep shareholders’ interest in mind,” management said in its comments on the latest quarterly financials for SSL Ventures.

The 2018 reverse takeover of music publisher C2W Music by Stocks & Securities Limited (SSL Jamaica) that gave rise to SSL Ventures was expected, at the time to be the rescue plan for shareholders of C2W and a profit turner for the SSL group, but SSL Ventures only got into a profitable position when it started offloading the businesses.

SSL Jamaica held a quarter of the shares in C2W Music before taking over the then listed music producer, acquiring 80 per cent of C2W shares while leaving the remaining 20 per cent in the hands of other investors.

The reverse takeover fast-tracked the plans of then CEO Drew Gray to have the vehicle, which was set up to make investments in start-up companies, listed on the Jamaica Stock Exchange.

Gray’s plans were to invest in start-up companies with a strong growth potential, a move that was expected to lift the listed company from its loss-making position into profits.

But within a year, SSL Ventures had its shares suspended on the Jamaica Stock Exchange twice. The most recent suspension was mandated by the JSE for breaches of the junior market rules.

By June 2019, the investment vehicle had racked up $45 million in losses under the leadership of then CEO Mark Croskery.

Croskery later bowed out, allowing Zachary Harding to take over the leadership after his company, Hyperion Equity Inc, in September 2019, acquired a stake in SSL Growth Equity Limited (Barbados), the parent company of SSL Jamaica.

Harding was appointed group CEO with responsibility for SSL Growth Equity, SSL (Jamaica), and SSL Venture Capital Jamaica Limited. He came to the helm armed with plans to restructure the operations of SSL Group to focus on its core wealth management and brokerage business while turning around the loss-making SSL Ventures.

Up to September 2019, the subsidiaries of SSL Growth Equity included SSL Asset Management Limited (Cayman); Dolla Financial Services Limited; SSL Capital (Cayman) Limited; SSL REIT Investors Limited (St Lucia) and its Jamaican subsidiary; and SSL (Jamaica) and its subsidiary, SSL Venture Capital Jamaica Limited.

SSL Growth Equity has since offloaded the shares in SSL REIT to Kingston Wharves Limited and Dolla Financial was sold to First Rock Capital.

If the takeover of SSL Ventures is successful, the subsidiaries remaining in SSL Growth Equity will be SSL Asset Management Limited (Cayman), SSL Capital (Cayman) Limited, and SSL (Jamaica).

At June 30, 2021, SSL Ventures’ top 10 shareholders were named as Stocks and Securities Limited (Alpha) with 79 per cent, Kris Astaphan, Drew Gray, Gerald Wight, Sheldon Powe and Mellissa Green-Powe, Croskery Holdings Limited; Nkrumah Wilson, Alanah Jones, Stocks and Securities Limited Managed Account; and Derek Wilkie.

karena.bennett@gleanerjm.comneville.graham@gleanerjm.com