Sygnus Credit brings in US$50m capital raise
KINGSTON, Jamaica – Despite seeking a new round of funding close to the yuletide season and in one of the quietest years in recent times on the Jamaica Stock Exchange (JSE), Sygnus Credit Investments Limited (SCI) was able to rake in US$50.25 million (J$7.78 billion) to fund its pipeline of private credit deals and next round of growth.
The St Lucian registered company had published its cumulative redeemable preference share prospectus on November 13 where it had sought US$25.10 million (J$3.99 billion). The offer which opened on November 20 and had an original closing date of December 6 was extended to December 15 due to the offer being oversubscribed. It’s now been revealed on the basis of an allotment published on Friday that SCI’s three classes of preferred shares received US$51.05 million (J$7.91 billion) in applications from investors.
“We had a great lead broker who advised us properly and pushed very hard. Some of it is that we had a good story to tell because we were coming off our very strong fiscal year end. The SCI story is a pretty decent story as we have consistently paid out to the ordinary shareholders, and this is the first opportunity for the regular person to actually participate in SCI outside of a raw equity offer. The demand really was substantial from the get-go utilising JMMB as the lead broker,” said Jason Morris, chief investment officer at Sygnus Capital Limited in an interview with the Jamaica Observer on Friday.
SCI had originally sought to issue eight million class C preference shares at J$100 each before the pool was doubled to 16 million shares. SCI received $1.67 billion in subscriptions, which was 109 per cent above the original target. Investors will be allotted the first 250,000 shares applied for and will receive 71.13 per cent of the excess applied for this class.
SCI sought to issue one million class D preference shares at US$10 which was increased to 1,678,080 shares. SCI received US$16.78 million in subscriptions, which was 68 per cent above the original target. These preference shares pay 8.00 per cent per annum in preference dividends for a term of two years. Investors will receive all the shares they applied for in this class.
SCI’s class E preference shares which were priced at US$10 saw the pool increase from one million shares to 2,321,920 shares. This class received US$23.56 million in offers which was 136 per cent above the original target. These preference shares pay 8.50 per cent per annum in preference dividends for a term of three years. Investors will be allotted the first 25,000 shares applied for and will receive 66.61 per cent of the excess applied for in this class.
This preference share offer is now SCI’s most subscribed public offer, exceeding the December 2020 additional public offering (APO) which had US$27.6 million (J$3.9 billion) in offers. SCI’s initial public offering (IPO) in June 2018 had seen the company raise US$22 million.
SCI’s asset base was valued at US$161.97 million at the end of September with US$68.95 million in shareholders equity. While the carrying value of its investments was US$152.40 million on its balance sheet, the fair value of its investments was US$152.57 million with the core portfolio excluding Puerto Rico at US$128.23 million. This portfolio brought in US$3.68 million in interest income and US$744,834 in net profit for its first quarter.
Morris noted in SCI’s November earnings call that its Jamaican pipeline of deals was US$75 million and US$150 million for the rest of the region. Thus, the preference share raise will go a long way to funding part of that Jamaican pipeline while it continues deliberations with international financiers for a US$100 million credit facility. SCI’s broader goal is to participate in US$1 billion in private credit transactions across the region which will include sponsoring a new special focus fund in Puerto Rico. This is all with an aim to grow the portfolio of investments and income for shareholders.
“Even today, we were socialising transactions at our investment committee, even though it’s Christmas in preparation for deployment of that capital in the New Year. It doesn’t really change anything per say than give us a lot more work and allow us a lot more flexibility in terms of how we deploy. It is always good to raise more money than what you went for. We appreciate all of the investors and clients who would have entrusted their capital with us to be good stewards of that capital,” Morris closed.
SCI’s preference share offer is one of only three JSE public offerings in 2023 with the other two being One Great Studio Company Limited’s (1GS) IPO and 138 Student Living Jamaica Limited’s APO. The 1GS IPO was oversubscribed by 61 per cent to the tune of $545.19 million in subscriptions while 138’s APO only brought in one quarter of the original $2.15 billion it sought, with the offer only being $10.48 million above the minimum for it to have been deemed successful.
It should be noted that there were nine public offers in 2022 where more than $12 billion in subscriptions was received.
Higher interest rates have been a hallmark discussion in 2023 as investors reduced their consideration for straight equity investments on stock markets and instead sought other alternatives to preserving and earning consistent capital. It was also marked by different developments in the Jamaican securities dealer space where investors also became more circumspect to where they parked their money and how they attempted to tackle inflation.
This led to some investors pulling money from the equity markets and in turn from different collective investment schemes like unit trusts and mutual funds which observed higher than normal redemptions than issuance of new units/shares.
SCI noted in the announcement that investors that should receive refunds will see credits to their respective accounts by January 5, 2024. The preference shares are anticipated to be listed by January 24. Sygnus Capital is SCI’s investment manager and was the lead arranger for the offer. JMMB Securities Limited was the co-arranger for the offer which was the first time it deployed its publicly available IPO application platform.