To strengthen its ability to deploy more private credit to businesses, Sygnus Credit Investments (SCI) said it is now working to build out partnerships with international credit facilities through which it hopes to access approximately US$100 million as it moves to expand the quality and quantity of its funding mix.

Chief Investment Officer (CIO) Jason Morris, speaking on Monday during an earnings call in which he reviewed the company’s financial year ended June 2023, said discussions were now underway, with the hope of inking at least two deals in the coming months.

“We are still in discussion with our international partners as we try to secure the US$100 million in credit facilities. We are now in advanced talks with two of these partners while we also look at others. We know that it takes diligence and a lot of time to access international credit facilities, but even at six years old, we are adamant that we want to do this in order to diversify the funding mix of SCI,” he stated.

Citing a heavy dependence on the local market for funds, Morris said the decision to tap into overseas funding will help the company to go after greater opportunities to deploy more funding to micro, small and medium-sized enterprises (MSMEs) looking to grow and expand.

“We’re looking to have multiple channels of financing to supply multiple lines of businesses as we expand and grow the suite of solutions we offer to entrepreneurs. Having had the ability to deploy nearly US$200 million in private credit [up to US$197 million in 2023], we have the scale to now command even much larger transactions and to participate in segments of the market that we couldn’t when we only had US$15.7 million [in 2018 when the company started],” Morris said.

“We are therefore looking forward to tying up some of these international financing facilities as we strengthen the bond with partners to provide the local and other markets across the region with funding coming out of these entities. We will be able to speak more about these partnerships once we sign on the dotted lines,” he indicated.

“SCI is moving its original business model to one where we can have dual earning capacity, but we need to bring in new and different types of capital to allow us to do that at a very rapid pace,” the CIO also said.

Highlighting the current realities of the economic environment plagued by high inflation and rising interest rates, Morris said the need to have alternative funding channels and flexible debt capital becomes a real need, especially for small and medium-sized firms desirous of growth.

Bullish on its strategic growth objective to participate in minimum US$1 billion worth of private credit transactions across the region within the next few years, Morris said that the latest efforts in conjunction with others puts the company in an accelerated position to increase value.

“SCI’s private credit platform in Puerto Rico, and some other seven jurisdictions in which we deploy capital, is now really focused on getting to this US$1-billion participation level and our goal is to get to this in under four years or less,” he noted, pointing to benchmark metrics including revenues of over US$12.5 million with returns on equity (ROE) above 10 per cent and a 20 per cent annual growth on earnings per share (EPS) along with dividend yields above five per cent.

The Puerto Rico-based Acrecent Financial Corporation (AFC), which SCI acquired in early 2022, provides financing for a range of industries. The full integration of this subsidiary, the company said, was completed during the year.

Up to the end of the financial year ended June, total investment income for the company according to an audited report totalled US$8.9 million backed by profit of US$5.13 million coupled with record growth in its private credit portfolio — which grew beyond the US$150-million threshold for the first time.

Eyeing other areas for growth, the company’s directors, in looking to later this month launch a new preference share, pending the required regulatory approvals, said its roll-out, along with other unsecured debt, presents a good mix of capital for the company.

With its three-year share buy-back programme launched in June in progress, the directors further signalled that they remain focus on delivering increased shareholder value. Its board is to meet this month to consider a dividend.

Commenting on some other developments concerning the company’s operations, SCI, which stands as one of the largest creditors in the now bankrupt Mystic Mountain attraction in St Ann with investments of about US$1 million, said it is now working with lawyers and the court to recoup lost earnings.

“We have a claim against the asset itself and we also have external collateral in the form of land,” Morris noted, refraining from going much further in detail about the legal matter.