Sygnus Credit Investments Limited (SCI) is seeking to raise up to $4.75 billion (US$30.05 million) in its latest cumulative redeemable preference share offer, which is meant to repay US$11 million in debt and support its pipeline of deals valued at over US$50 million in Jamaica.

The private credit company published its prospectus on Monday, which will see it seek to raise $1.2 billion for its class H preference shares, with an option to upsize it to $1.6 billion, and US$20 million ($3.15 billion) for its class I preference shares. The class H preference shares have an interest rate of 10 per cent while the class I preference shares carry an eight per cent interest rate.

However, unlike the last public preference share raise Sygnus Credit completed in December 2023 which had tenures/terms for two to three years, these new preference shares are perpetual in nature, which means they have no defined maturity date. Instead, the company will have the option to redeem these preference shares after 15 years, which would be around June 2038 based on the terms of the offer. If Sygnus Credit doesn’t redeem these new preference shares at that first redemption period, it will have the option every three years after that date to consider redeeming these preference shares. Productive Business Solutions Limited and AS Bryden & Sons Holdings Limited are the only other companies on the Jamaica Stock Exchange (JSE) with listed perpetual cumulative redeemable preference shares.

“There is no shortage of demand for the solution that SCI is providing, which is flexible debt capital to grow its business across the region. It’s capital that is perfectly aligned with entrepreneurs who are expanding and growing their business and need an innovative solution to their financing needs. The company is not just [on] a growth path, but we’re scaling the business to be much larger and bigger than it was before,” said Jason Morris, co-founder and chief investment officer of Sygnus Capital Limited at SCI’s first quarter earnings call held last Friday.

SCI has been tapping numerous avenues to fund the growth of its private credit business across the Caribbean. It received approval for a US$10 million on September 18 from World Business Capital, Inc, with the loan being guaranteed by the United States Development Finance Corporation, an agency of the United States federal government. SCI continues to finalise discussions with different international financing partners for additional credit facilities as it seeks to tap over US$100 million in the medium term.

If SCI is successful in raising the required capital and listing its preference shares on the JSE, it would be the second-largest issuer behind JMMB Group Limited in terms of number of preference shares listed. This latest preference share issue would be the fourth public offer Sygnus Credit would have executed since its initial public offering, additional public offering and previous preference share offer.

SCI is a private credit provider, which means that it provides different structures of financing which can be secured by different asset types like inventory, trucks, equipment and so on. This structure has made it attractive to numerous businesses across the English-speaking Caribbean, with other listed companies like Derrimon Trading Company Limited, Seprod Limited, Tropical Battery Company Limited, and Express Catering Limited using SCI’s credit facilities over the last six years. Even Norbrook Equity Partners Limited, parent company of Mailpac Group Limited, tapped SCI in 2021 to enhance the growth profile of companies under its portfolio.

This has led to SCI’s portfolio of investments jumping from US$32.39 million in June 2019 to US$188.05 million in June 2024, with the asset base rising from US$38.15 million to US$203.36 million. Its capital base (shareholder’s equity) also expanded from US$37.59 million to US$72.10 million. Over that time frame, SCI’s profitability has increased from US$2.05 million to US$6.03 million.

SCI’s first quarter financials saw its income jumped 230 per cent from US$1.94 million to US$6.40 million with the overall net profit rising 562 per cent from US$744,834 to US$4.92 million. This improvement in earnings was largely due to the US$3.78 million fair value gain related to its 95.58 per cent interest in Sygnus Credit Investments Puerto Rico Fund LLC.

SCI’s asset base also exceeded US$200 million as it improved two per cent to US$203.36 million during the quarter as investments hit US$192.70 million. These private credit investments had an average tenure of 1.4 years and were spread across 37 companies. Total liabilities and shareholder’s equity were US$126.34 million and US$77.02 million, respectively.

The improved first quarter performance saw SCI’s stock price rise nine per cent over the last two trading days to $12.85 on Monday, while the USD stock price was US$0.0697. Based on SCI’s last two dividends totalling US$0.00539, the dividend yield was 7.73 per cent, which isn’t subject to withholding tax for Jamaican residents.

The class H preference share is priced at $100 per share while the class I preference shares are priced at US$10 per share. The minimum number of units that can be purchased is 500 shares for the class H shares, with increments in multiples of 100 units and a minimum of 50 shares to be purchased for the class I shares, with increments done in multiples of 10 units. This translates to a minimum investment of $50,000 or US$500 depending on what an investor chooses to apply for.

SCI is expecting to raise a net amount of US$26.13 million after paying fees related to the offer. JMMB clients can apply for the preference share offer using lead broker 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 opens on November 25 and closes on December 12 and needs to raise at least US$10 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 annual general meeting on January 29.