Sygnus revises growth strategy, eyeing share buy-back plan
Published:Friday | February 18, 2022 | 12:13 AM
Sygnus Credit Investments Limited, SCI, has now surpassed US$100 million in assets, two years ahead of target, and is in the process of “reimagining” its growth path and recalibrating strategy to maintain the company’s momentum.
The company in its four years of operation has provided credit to companies, serving as an alternative source of financing to traditional lenders.
But it recently shifted focus, announcing the acquisition of Acrecent Financial Corporation in Puerto Rico, for which regulatory approval is pending; and is already eyeing other investment origination prospects in the English, Dutch and Spanish-speaking Caribbean regions.
Acrecent Financial is in the same line of business as Sygnus as a provider of private credit.
SCI’s new focus also includes building relationships with international financial partners and global institutional asset managers to take on bigger deals.
At the same time, it’s in the process of exploring a share buy-back or equivalent programme, designed to return value to shareholders.
“The upshot of these factors is that we will create the launching pad to scale the business substantially,” said Executive Vice-President and Chief Investment Officer of Sygnus Group, Jason Morris.
“By doing that we will enhance shareholder value through increased earnings, dividends and even better returns on equity,” he told the Financial Gleaner after the company’s investor call on Wednesday.
Trading in the SCI stock has been lacklustre and characterised by small volumes, with institutional investors, who hold 65 per cent of the outstanding shares, preferring to hold, leaving market activity to mostly small players. It’s resulted in the SCI stock, especially those listed on the JMD-denominated market, trading below book value, Morris noted.
The company has two sets of ordinary stocks that are listed and cross-listed on the Jamaican and US dollar sides of the market. The SCI JMD ordinary shares closed at $15.64 on Wednesday, below the company’s book value of $17.63 per share.
Wednesday’s briefing was the first investor call for Sygnus Credit in its near four years of trading on the stock exchange, but will become a regular event.
“Certainly, this is in keeping with international best practice. If we are to operate in a larger space, among bigger players then this is the way forward,” Morris said.
At half-year ending December 2021, Sygnus Credit reported earnings of US$2.46 million, up 95 per cent relative to the US$1.26 million made in the similar period in 2020. The earnings came on the back of US$3.7 million of core revenue.
During the period, SCI issued a multi-series dual currency bond which raised net proceeds of just under US$27 million. This, Morris said, was instrumental in pushing total assets past the US$100 million mark for the first time, to US$110.34 million – a target it had not expected to hit until December 2023.
Some US$22.09 million of the bond proceeds was raised during the second quarter, that is, the October-December 2021 period.
“This puts us ahead of schedule and the capital raised was consistent with SCI’s strategy to grow its private credit portfolio and expand its regional investment footprint across the Caribbean,” Morris said.