Sygnus Deneb Investments Limited has partnered with the Facey Group to acquire a 42.2 per cent stake in CS&T Group Limited as the private equity company continues its strategic expansion to broaden its service offerings across the Caribbean and Latin America.

The investment was done through the issuance of convertible preference shares effective December 8. It represents the second portfolio investment in three months after Sygnus Deneb invested US$4 million ($600 million) into Chukka Caribbean Holdings Limited on October 7. Sygnus Deneb, CS&T Group and Chukka are all St Lucian international business companies (IBCs).

CS&T is an integrated business-to-business (B2B) logistics services provider that offers corporate clients the opportunity to outsource their logistics operations. The group is positioning itself to capitalise on the fragmented freight forwarding and consolidation market and will also provide commercial warehousing space in Jamaica. This is part of its focus on benefiting from the global logistics outsourcing market.

“This investment in CS&T provides exposure to the expanding logistics sector, which is one of the fastest-growing sectors in the region. CS&T’s regional strategy provides an opportunity for diversification of revenue streams. We are excited to partner with the Facey team, as they have a strong track record for managing and growing regional business,” said Stephen Wright, Sygnus Deneb’s assistant vice-president for private equity and M&A, in the press release.

Sygnus Deneb will hold board seats on CS&T proportional to its share ownership. CS&T is diversified by revenue streams and geography which provides downside protection to investors.

While the release didn’t reveal any information about the investment value or capital structure, St Lucian IBC registry Pinnacle revealed that CS&T Group was incorporated on March 7 with further amendments made to its memorandum and articles of association on November 11 and November 25. The November 11 amendment saw the company being authorised to issue 1.5 million shares with one million ordinary shares carrying one vote per share while the remaining 500,000 shares are perpetual preference shares. Both classes of shares have no par value with extensive changes made to articles of association on the same day.

However, the capital structure was changed again on November 25 as per the filing.

One company under the CS&T Group includes Miami-based Gap Forwarding Inc, which is its centrepiece for expansion into Latin America. Chief executive officer of Facey Commodity Company Limited Patrick Scott is listed as the president of Gap Forwarding with Melanie Subratie, Sandra Shaw and Niall O’Brien listed as other company principals. Gap Forwarding has annual report filings going back to 1995 on Sunbiz.

“Sygnus and the Facey Group have a long-standing relationship and partnership built over the last five years. CS&T is a leading regional shipping and logistics business that is poised for significant growth in Central America and the Caribbean. We are very excited to partner with Sygnus as we accelerate the growth path of the company over the next few years,” CS&T chairman Paul B Scott said.

This is the second Musson Group-affiliated deal that the Sygnus Group has participated in over the last five years. Sygnus Credit Investments Limited (SCI) had a US-dollar-denominated monthly inventory factoring arrangement with Seprod Limited that had an interest rate of 15 per cent and had a balance of $503.85 million at the end of 2018.

Sygnus Deneb targets its investments at medium-sized businesses with revenue ranging from US$5 million to US$50 million. Its first investment was a 40 per cent stake in Dutch Caribbean-based Aruba Wine and Dine valued at US$8 million in 2020.

The investment firm also focuses on key growth industries, turnaround and buy-out capital for a varied array of businesses. It was formally launched in February 2020 with a target return on equity of 18 per cent and a potential dividend payout ratio of up to 85 per cent of net profits.

According to Wright, Sygnus Deneb has a pipeline of private equity opportunities valued around US$100 million that includes industries such as maritime, retail, energy, manufacturing and distribution. It is the sole private equity vehicle in the Sygnus Group right now, with sister companies SCI and Sygnus Real Estate Finance Limited both listed on the Jamaica Stock Exchange. All of these vehicles are managed by Jamaican securities dealer Sygnus Capital Limited.

“With this investment, Sygnus Deneb is now diversified across 3 industries and 9 countries. We have 4 deals in an advanced state and 3 other deals in the preliminary phases,” stated stated Ike Johnson, chief operating officer, co-founder and head of private equity and M&A at Sygnus Group.