AFTER a below-expectation performance in the second quarter due to higher debt servicing costs, Sygnus Credit Investments Limited (SCI) produced a superb performance as profits for the third quarter rose to US$1.03 million ($155.34 million) with its asset base standing at US$85.2 million ($12.84 billion).

The private credit company, which specialises in unique deals with medium-size companies across the Caribbean region, saw total investment income grow by 51 per cent to US$1.59 million for the quarter as the company deployed more cash from the proceeds of its US$27.1-million additional public offering (APO) in January.

This resulted in the company setting a record for total investment income over the 9 months to US$4.25 million, generated largely from its 30 portfolio companies.

SCI’s investment portfolio now has a fair value of US$73.58 million, which is US$26.42 million shy from its US$100-million target that it hopes to achieve within the next two years. This would allow the company to get its portfolio of investments rated by a regional rating agency and source cheaper debt to grow the company’s scope.

SCI has US$22.9 million in approved debt financing, once accounting for an alternative public offer (APO) proceeds in its original US$50-million target. The investments span eight regions in the Caribbean, with Jamaica leading the allocation at 53 per cent and Montserrat and the ABC Islands (Aruba, Bonaire and Curaçao) each representing 2 per cent of the geographical exposure. SCI’s largest exposure from the 11 industries it invests in is the hospitality segment, that now represents 18 per cent of the portfolio, followed by financial and infrastructure that make up 15 and 14 per cent, respectively.

Although management fees and other expenses grew to a cumulative US$549,110 during the quarter, SCI benefited from a US$27,573 impairment provision compared to the US$180,417 in the prior quarter which arose from the company’s successful exit of 3 portfolio investments totalling US$4.79 million. Foreign exchange losses shrunk significantly to US$32,506 versus the US$714,427 in the prior quarter as SCI reduced its Jamaican-dollar exposure to less than 1 per cent of its balance sheet. SCI’s nine months’ net profit of US$2.29 million surpasses the US$1.97 million set in its 2020 financial year.

With US$8.21 million in cash and US$2 million in revolving credit lines, SCI expects to deploy more capital in its fourth quarter as more Jamaican and Caribbean companies across the region source private credit to complete business needs. Of the US$11.2 million in new investment commitments made during the third quarter, 75 per cent of the funds were used by companies for acquisition financing and business expansion while the remainder of the funds were used for working capital needs. Sygnus paid out US$868,741 in dividends to its shareholders on April 1, which included the new investors from its capital raise. It’s equity base stood at US$64 million at the end of the third quarter.

“While the assessment of the overall impact of COVID-19 is ongoing, SCI continues to rely on the deep knowledge, experienced team and proven investment philosophy that has been developed by its investment manager and has thus far served it well during a period of unprecedented crisis. The Caribbean region continues to feel the effects of the global [novel coronavirus] pandemic, with varying degrees of impact on the economies in which SCI’s portfolio companies operate. Despite these near-term challenges, the bridge to normalcy appears to be a combination of strong vaccination programmes and enforcement of COVID-19 protocols, which is likely to occur at varying speeds across Caribbean territories,” stated the Sygnus report to shareholders.