DOLLA Financial Services Limited will be returning to the capital markets in short order based on the insatiable demand which has pushed its loan book past $2.57 billion and seen its inventory of cash and deposits drop to $111.31 million.

Dolla raised $250 million in its initial public offering last June and raised $1.17 billion in a bond four months later. The microcredit business has not raised any additional capital so far in 2023 but its loan book has jumped by nearly 50 per cent, with total assets up 25 per cent to $2.82 billion at the end of June 2023. Dolla’s asset base and loan portfolio stood at $334.02 million and $294.26 million, respectively, at the end of 2020.

“It’s obvious that the business is going to plateau if we don’t raise some more capital. If we want to keep the growth going, which is just the nature of the business, we just continuously have to raise capital,” said Dolla Chief Executive Officer Kadeen Mairs in a call with the Jamaica Observer on Tuesday.

This growth in the value of its loan book has been translated to its income statement, where interest income doubled to $294.66 million in the second quarter (Q2) and to $591.69 million in the first six months overall. Even with the rise in interest and operating expenses, Dolla’s Q2 net profit improved from $59.29 million to $105.50 million, with the first six months showing 91 per cent growth to $227.16 million.

Dolla earned $280.47 million in net profit for 2022 and has set a profit-before-tax target of $500 million with a loan portfolio of $3 billion, for 2023. Business loans currently account for 81 per cent of the loan book, with 80 per cent of the $2.57-billion portfolio secured.

When asked about the potential for seeking other forms of capital, Mairs explained, “We’re maxed out on the Junior Market — just started to benefit from the tax remission and don’t want to lose it. Regulated entities are taxed at 33 1/3 per cent compared to before we got regulated, when we were taxed at 25 per cent. Imagine going to the Main Market and we’re making $500 million. We’d get taxed at 33 per cent, and it would be better to pay the shareholders dividends instead.”

Mairs had mentioned in Dolla’s Q1 earnings call that it was seeking US$5 million from undisclosed American financiers. Dolla’s current total liabilities stand at $1.92 billion, with $1.78 billion related to loans payable. The company’s earnings call will be held today at 9 am on Learn Grow Invest on YouTube.

Dolla is one of the two companies on the Jamaica Stock Exchange that has received a microcredit licence from the Bank of Jamaica (BOJ), which has approved 16 entities to date. The other listed company to get the licence is Access Financial Services Limited.

When asked about the opportunity for new acquisitions Mairs mentioned, “The acquisitions are there for the taking but we have to raise more capital. The key thing on the table is raising more capital, and we need a couple billion dollars.”

This also applies to Dolla’s pursuit of growth in other markets beyond Jamaica. The company is currently awaiting approval from the BOJ to commence operations in Barbados and St Lucia, which Mairs estimates will require $150 million for a location and to build out the loan book. It had planned the expansion of a new location in Berbice, Guyana, but instead focused on servicing its existing market in the capital and back in Jamaica.

“Based on the demand we have right now in Georgetown, it wouldn’t make any sense until we raise a lot more capital to open a new location and create more demand. We already have enough demand in Georgetown with the supply of cash,” Mairs added.

Its Ultra Financier Limited subsidiary has continued to find success among high-net worth (HNW) individuals, with Mairs mentioning that similar to its Dolla portfolio which has an average loan tenure of 12 months, Ultra has mainly seen loans in the three-month timeline, especially in the areas of bridge financing. Ultra opened its Montego Bay location in May as its portfolio grew to $500 million with no non-performing loans (NPL’s).

The Dolla report gave its share price a significant boost on Monday as it climbed to $2.42 before retreating to $2.27 on Tuesday. Dolla’s board will consider a dividend payment to its shareholders at tomorrow’s board meeting.

While focusing on growing the business to new heights later in the year, Mairs reiterated his belief in publishing the company’s quarterly reports in expeditious fashion. Dolla published its Q2 report on Friday, which is a Junior Market record considering that it was due by August 14. The CEO highlighted that publishing early allows the company to focus on its business and serving its 15,000 plus shareholder base.

“Based on our current run rate it’s pretty clear to see that the business is going to be more than doubling last year’s profit. The focus right now is to raise more capital for the business and to continue to focus on our non-performing loans. We’re ahead of where we budgeted, based on our approved forecasts, and all we have to do is maintain our stride into the year end,” Mairs closed.