MFS Capital Partners will be looking to raise new capital that will see it maxing out the Jamaica Stock Exchange’s (JSE’s) allowable capital raise of $500 million for Junior Market-listed companies.

The company last week revealed in a notice that its board of directors has approved the increase of its authorised shared capital as it prepares to propose to its shareholders a rights issue and the conversion of debt into equity. Shareholders will also vote on share option scheme for employees at MFS Capital’s next annual general meeting, for which a date is yet to be announced.

“Right now, the resolution we’re putting in front of the shareholders is a rights issue. That is not to say we won’t consider putting in front of them other debt options in the future,” MFS Capital CEO Dino Hinds told the Jamaica Observer.

“The original reiteration of the company, we already raised $120 million. So that would limit what we can to do $380 million,” he continued.

MFS Capital Partners listed on the JSE in August 2022 by introduction after its takeover of SSL Venture Capital (SSLVC) in May that year. Its predecessor was also listed by introduction in 2018 after the failure of C2W Music, which raised $120 million in its initial public offer.

At present, MFS Capital is consulting its broker, mentor, and legal advisors at Ramsay and Partners on whether to pursue a renounceable or non-renounceable rights issue. It is also getting advice on how converting debt to equity will impact its capital raise, Hinds revealed.

As at September 30, 2023, the company had payables of over $59 million.

When asked about the broker being considered to lead the capital raise, the CEO said the company will disclose that information in the prospectus of the rights issue, once the company has received shareholder approval, in keeping with JSE rules.

Quizzed about the purpose of raising new capital, the CEO disclosed that it would accomplish three objectives.

“One, to pursue pipeline acquisitions; two, we’re looking to expand the balance sheet of the company in terms of our financial assets; and, of course, to pay the cost of the raise,” he stated.

He added that the expected injection of cash flow from the rights issue will allow the company to pursue acquisitions and expand its private credit offering, as previously indicated. Currently, MFS Capital is awaiting approval from the Bank of Jamaica on its bid to acquire Microfinance Solutions.

The company generates revenues from earnings of companies in which it has a stake. However, its revenue for the first quarter fell from $12.56 million in the same period in 2022/23 to $297,000, as at September 30, 2023.

Notwithstanding, its other income rose to $2.77 million as a result of arranging private credit and alternative financing deals.

Hinds told the Sunday Finance in December last year that the company has a pipeline of other acquisitions that it will pursue after the completion of the Microfinance Solutions takeover.

“We believe that there are short-term opportunities and transactions that we have in front of us now that will boost the balance sheet and also improve the cash flow of the company,” he reiterated.

Moreover, he said that the proceeds of the rights issue will contribute to the company’s talent recruitment initiative as it embarks on expansion in 2024.