MAYBERRY Investments Limited has purchased an additional 10 per cent stake in Dolla Financial Services Limited as it increases its interest in listed microfinance companies.

The disclosure, which was made to the Jamaica Stock Exchange (JSE), noted that its wholly owned subsidiary Widebase Limited purchased 250 million shares of Dolla on September 29. Co-founder and managing director of FirstRock Private Equity Limited (FRPE) Christopher Yeung confirmed the sale, in a call with the Jamaica Observer, that a Mayberry Investments Limited (MIL) subsidiary purchased the nine per cent stake or 225 million shares sold on July 24.

Prior to July 24 purchases, Mayberry Jamaican Equities Limited (MJE), a 56.83 per cent-controlled MIL subsidiary, owned 21,625,388 shares or 0.9 per cent of Dolla’s issued shares. This would take the MIL group’s interest up to 496,625,388 shares or 19.87 per cent of Dolla.

Supreme Ventures Limited (SVL) purchased the other 15 per cent stake, or 375 million shares, on July 24 from FRPE – which has seen its interest decline from 60 per cent at the start of the year to 26 per cent following the Widebase sale. MJE owned 18.54 per cent of SVL at the end of June, which made it the second-largest shareholder.

“We have some new partners on board for Dolla and I’m very excited about the new partnership. SVL and Mayberry bring a wealth of experience and they bring capital as well so I think the shareholders of Dolla should be very optimistic and excited about the partnership. I’m excited. I’m a shareholder, we’re still shareholders [and] I think it’s going to be fruitful for all the parties involved,” said Yeung on FRPE’s sale of Dolla shares.

FRPE purchased 75 per cent of Dolla in January 2021 for US$1.1 million ($158.88 million) before selling 15 per cent in June 2022 for $187.5 million. FRPE would have collected in aggregate $108.90 million of dividends up to September 1. Although Yeung did not disclose the sale price for either transaction, which did not show up as direct market trades nor block transactions on the JSE, any price between $1 to $2 would net anywhere from $850 million to $1.70 billion. According to MJE’s third-quarter report, Dolla made up 2.3 per cent of its $24.23-billion investment portfolio or $557.29 million.

This sale has resulted in the recalibration of Dolla’s shareholding base, with FRPE now owning 26 per cent, Dequity Capital Management Limited with 20 per cent, MIL Group with 19.87 per cent, and SVL with 15 per cent. FRPE’s interests are represented on the board by Dolla Chairman Ryan Reid and Dr Michael Banbury, and Dequity is represented by former Dolla Chief Executive Officer (CEO) Kadeen Mairs. SVL CEO Xesus Johnston and MIL Chief Operating Officer Andrea Whittaker were invited to join Dolla’s board in July but there has been no subsequent disclosure on the confirmation of their appointment by the Bank of Jamaica (BOJ).

Yeung noted that Dolla and the new shareholding team are currently working on a capital raise to restock Dolla’s inventory, based on the company’s current growth plans. SVL has committed to supporting Dolla to the tune of $5 billion in the coming years. MIL CEO and SVL Executive Chairman Gary Peart has refused to respond to Jamaica Observer queries since July, and newly appointed Dolla CEO Kenroy Kerr did not provide a response ahead of press time.

“Mayberry’s very optimistic about the business. I can’t speak for them but I think their actions speaks louder than words. Mayberry and SVL bought 34 per cent, which is a sizeable amount collectively which speaks volumes,” Yeung added.

MIL and SVL’s collective group stakes both remain below 20 per cent, considering the JSE Junior Market rules which note that any eligible Junior Market company should not be an associate of a company listed on the Main Market of the JSE or any other stock exchange. Dolla listed on the Junior Market in June 2022.

Dolla’s third-quarter results are due by November 14 but it’s likely they will be published in October, based on the company’s prior timelines. The company’s stock price is up 8.89 per cent in October to $2.45, which leaves it with a market capitalisation of $6.13 billion.

“We’re using the proceeds from the sale to acquire two new businesses and want to try and replicate what we’ve done with Dolla with these new businesses. If all works out we would have purchased three businesses in this year. They’re not closed yet, but we anticipate that they’re going to close by the end of the year; both deals are outside of Jamaica,” Yeung noted following the private equity firm’s acquisition of a stake in Optimum Distributors Limited earlier this year. Optimum is currently on the hunt for a new CEO.

Microfinance interest deepening

Dolla was among the first 10 microfinance firms to receive a microcredit licence from the BOJ under the Microcredit Act 2021. McKayla Financial Services Limited, a wholly owned subsidiary of SVL, received its licence in July, while Lasco Microfinance Limited became the 21st firm to receive a microcredit licence on October 6. Lasco Microfinance is a wholly owned subsidiary of Lasco Financial Services Limited (LASF). MJE currently owns 20.64 per cent of LASF.

MIL has the ability to nominate two investor directors on LASF’s board, if they desire, following a 2015 amendment to the company’s articles. MIL Executive Chairman Christopher Berry and Peart resigned from the LASF board in December 2020. Peart is the 48th-largest shareholder in SVL with 4,153,597 shares, and third -argest shareholder in MIL with 45,566,665 shares or a 3.79 per cent direct stake. Berry is the executive chairman of MIL and MJE, along with being the largest shareholder.

MIL’s last major microfinance investment was in Access Financial Services Limited. MJE purchased 49 per cent of the company for $38 million in September 2006, before selling it for $938.38 million in December 2014. MJE received $237.88 million between 2010 to 2014.

MIL had its final court hearing, with Justice David Batts on September 28, for its scheme of arrangement but there has been no additional disclosure regarding the proposed restructuring. The original timeline for the completion of the scheme was by October 10 when MIL’s stock would have been delisted and Mayberry Group Limited listed in its place. The JSE’s listing committee would be the final body which would speak to the Mayberry Group listing that is to be done by introduction.