Eppley Limited generated a record $357 million in profit for the first six months ending June, that’s more than triple the $110 million profits it generated in the same period of the previous year.

The profits resulted from a $229-million gain on a bargain purchase from the tender for Eppley Caribbean Property Fund-Development shares, which took place earlier this year. However, excluding that gain, Eppley’s management says the core business remains solid, and the outcomes were expected. “Profitability would have improved 36 per cent [or approximately $150 million] relative to the first half of 2022,” Eppley’s General Manager Justin Nam said in a written response to the Jamaica Observer.

In addition to the $229 million gain during the period, Eppley’s asset management income combined with fee and other income also outperformed previous periods, growing by 62 per cent to $233 million for the first six months of 2023. The company’s shareholder equity now stands at $1.2 billion, compared to $979 million in the previous year. At June 2023, Eppley owned a $5.8-billion investment portfolio consisting of cash, loans, leases, receivables and investments in its mezzanine, real estate, infrastructure and asset management joint ventures, subsidiaries and associates.

According to Nam, its out performance was due to its strong balance sheet which positioned it to deploy capital at scale whenever attractive opportunities emerge, such as the purchase of the development fund shares. “The gain on bargain purchases reflected during the period highlighted the company’s ability to identify and execute on opportunities that fit its mandate,” he said. “We are continuing to see solid deal flow across all asset classes as our business model is set up to perform well as credit conditions and access to capital tighten.”

By using the strategy of diversifying its funding base and increasing its fee-based income to complement its proprietary portfolio, Eppley saw its asset management income grow to $147 million. Despite the evolving economic environment, Eppley reported no delinquencies in its commercial loans and lease portfolios even during the pandemic.

“Prior to making any investment, we employ measures to understand and protect on the downside, including ensuring that our security interests in the various forms of collateral are carefully documented to ensure that enforceability,” Nam shared with the Sunday Finance.

He explained that while Eppley’s assessments involve deep analysis, creating and evaluating models. Detailed reviews of underlying legal agreements and contracts with counterparties are conducted to enable it to further institute effective risk mitigation mechanisms prior to investing.

“Our team also has extensive discussions, and site visits with counterparties and gets a deep understanding of their operations to determine the most appropriate structure for the investment.

“This is testimony to the level of research, analysis and documentation which are required before any investment is approved by our investment committee,” added Nam.

The investment company has maintained a strict focus on cash flows across all asset classes, and that is what supports its ability to maintain a strong dividend payment track record.

Earlier this week, an interim dividend payment was announced of 5.2 cents per share, payable on September 15.

Nam revealed that Eppley intends to continue focusing on increasing fee-based income in the upcoming quarters, as it has significantly improved the quality of its business. “The outlook for the remainder of the year remains positive, supported by a healthy pipeline of opportunities across the different strategies we manage. We remain committed to bringing our value-focused approach towards driving value for our investors,” he said.