Sygnus Credit Investments Limited (SCI) has launched its US$25.10-million (J$3.9-billion) cumulative redeemable preference share offer, which is set to fund expansion plans for its private credit portfolio.

The offer, opening next Monday, will see the company offering three classes of preference shares to the public. SCI is looking to issue eight million units of Class C preference shares with a 10.50 per cent rate due in 2025; one million units of Class D preference shares with a 8.00 per cent rate due in 2025; and one million units of Class E preference shares with a 8.50 per cent rate due in 2026.

The Class C preference share is priced at J$100 per share while the Classes D and E preference shares are priced at US$10 per share. The minimum number of units that can be purchased is 500 shares for the Class C shares and 50 shares for Classes D and E with increments done in multiples of 10 units. This translates to J$50,000 or US$500 depending on what an investor chooses to apply for. These preference shares should be listed on the Jamaica Stock Exchange (JSE) after the offer closes.

“SCI continues its transformative growth path, aggressively expanding its private credit portfolio to scale the business and achieve its strategic goals. As part of this evolution, the company is dedicated to leading and participating in private credit transactions of at least US$1 billion across the Caribbean over the next three years. SCI has advanced its discussions with international partners for US$100 million to finance over US$150 million of opportunities across Jamaica and the wider Caribbean region. SCI remains committed to shareholder value creation as the business continues its rapid expansion,” said Jason Morris, chief investment officer at Sygnus Capital Limited, in a press release.

A preference share is usually a type of share that tends to rank above ordinary shareholders and is entitled to a guaranteed dividend payment. These shareholders usually don’t have the ability to vote at shareholder meetings but are paid before ordinary shareholders in the event of a wind-up of the company. These shares can be included in debt or equity depending on how they are structured.

SCI recently announced its intentions to have US$300 million in originations over the next three years across the Caribbean region with a larger focus of leading and participating in at least US$1 billion in transactions across the region over the next four years. SCI originated US$65.1 million in private credit transactions for its 2023 financial year ended June 30. SCI’s private credit portfolio was US$151.48 million at the end of June, an improvement compared to the US$122.51 million in 2022.

The current preference share raise and new credit facilities are aimed at getting the company to US$12.5 million in core revenues, having a return on equity above 10 per cent, annual earnings per share growth above 20 per cent and a five per cent dividend yield relative to the additional public offering (APO) price.

SCI’s core revenue or total investment income grew eight per cent to US$8.89 million with net profit climbing 34 per cent to US$5.13 million. This was against the backdrop of the company’s US$163.86 million balance sheet and US$69.81 million in equity.

Classes C, D and E preference shareholders will have the right to receive all dividends over any other type of distribution over ordinary shareholders and will rank above ordinary shareholders on the company’s capital structure.

SCI currently has a 8.50 per cent Jamaican dollar (JMD) preference share valued at US$2.09 million and a 6.00 per cent United States dollar (USD) preference share valued at US$2.83 million. SCI paid J$27.71 million on its JMD preference shares while paying US$173,268 on its USD preference shares in 2023.

SCI paid a US$0.00272 dividend on October 13 to its ordinary shareholders on record as of October 2 totalling US$1.60 million. SCI has paid US$11.95 million in ordinary dividends since listing on the JSE since June 2018. The company also recently launched its US$9-million share buyback where it purchased 2,614,799 ordinary shares for US$246,000 at the end of June.

The last major preference share offer was done by Productive Business Solutions Limited (PBS) which raised US$18.31 million (J$2.77 billion) through the issuance of perpetual cumulative redeemable preference shares. These types of preference shares have no fixed maturity date but can be called in the future after a mandatory period has elapsed.

Eppley Limited redeemed its five per cent preference share on August 17, which was also the same day they were delisted from the JSE. Eppley has four preference shares in issue with two set to mature next year. There are currently 18 cumulative redeemable preference shares listed on the JSE with 12 listed in JMD and the remaining in USD. JMMB Group Limited has 10 of these shares listed with four set to mature in January.

SCI is expecting to raise a net amount of US$23.98 million after paying fees related to the offer. JMMB clients can apply for the preference share offer using lead JMMB Securities Limited’s Moneyline platform while non-JMMB clients can apply on https://moneylineipo.jmmb.com, JMMB’s IPO platform. JMMB is the ninth broker to create an IPO platform. The offer closes on December 6 and needs to raise at least US$7.5 million in order for it to be successful and eventually be listed on the JSE’s Main Market and USD Market. SCI will have its first-quarter earnings call tomorrow and its annual general meeting on January 17.