DOLLA Financial Services Limited will be launching its newest subsidiary, Ultra Financier Limited, on November 1 to be led by CEO David Henriques.
The company was incorporated on August 3, according to the Companies Office of Jamaica records, but only received approval for its formation by its board of directors recently. The subsidiary will be injected with $350 million from Dolla's upsized $1.5-billion secured corporate notes (bond). Dolla is the sole shareholder with 1 million ordinary shares, with Dolla Chairman Ryan-Kwesi Reid, Dolla CEO Kadeen Mairs, Dolla Chief Financial Officer Trevene McKenzie, First Rock Private Equity (FRPE) Managing Director Christopher Yeung and Henriques as directors.
"Ultra is going to be lending to high net worth (HNW) individuals. We'll lend between $1 million to $100 million per person and we take luxury assets, prime investments, and properties as collateral. A person can carry their Cherry Gardens property valued at $200 million and borrow $80 million from us. Most times they [HNW] need to access money right now so they don't approach the bank," said Mairs in an interview with the Jamaica Observer last week.
Mairs noted that the team had been studying the business model for nearly five years in developed markets, and that the firm is focused on secured-asset lending. These assets can be antique cars, Rolex watches, yachts, paintings, property, or any asset for which there is an associated value which can also be secured effectively. While this isn't Dolla's first foray into borrowing against non-traditional assets as a microcredit company, this venture represents a dedicated focus to lend to a market with contained costs since the entire application process is done online.
Ultra's launch comes at a time when more businesses are lending against non-traditional assets or securitisation of financial assets such as receivables. The Quantas Financial Group's first investment solution is focused on the $600-billion receivables market and Sygnus Credit Investments Limited offering factoring, inventory repurchase agreements and infrastructure projects through esoteric, future flow securitisation instruments.
"It's great. Slightly different set-ups but it's been an honour to work with two companies being led by young leaders trying to pave their way through the various markets that they're in. A lot of exciting things ahead and really looking forward to it," said Henriques on his move to join Ultra and the overall Dolla team.
Henriques has over ten years of sales experience, with expertise in targeting HNW clientele. He was the head of ATL Automotive Group's Porsche division before making the switch.
Dolla is currently expanding at a quick pace as the company capitalises on the rising demand for capital and access to various capital market avenues. The company listed on the Junior Market of the Jamaica Stock Exchange (JSE) in June and raised $250 million before closing its bond last week, which was upsized. Mairs noted that Derrimon Trading Company's US$1-million loan to its Guyana subsidiary was rolled up into the bond. However, the company will be repaying the $100-million bridge loan from parent company FRPE once the bond reconciliation is complete. Lead arranger VM Wealth Management Limited is currently processing the applications.
Dolla's international expansion is going at a rapid pace as it continues to scale its Guyana operations. The subsidiary has a GY$190-million ($139.19-million) loan book and generated GY$67 million in income and GY$22 million in net profit. Dolla is allocating an additional $100 million from the bond to the subsidiary and is experiencing rapid growth in business loans for factoring and bridge financing options. It is currently awaiting feedback from its lawyers in The Bahamas, Barbados and St Lucia for money-lending licences in those jurisdictions.
Dolla's loan book currently stands $1.17 billion as of September, which is more than double the $519.31 million a year prior. The company has put down $250 million towards an acquisition and expects to give notification in short order about a potential deal with another microcredit company. It partnered with RTA Biz and Innovative Systems recently, and forged a new partnership on Wednesday with Baywest Wellness Hospital and Baywest Wellness Clinic for cosmetic surgeries under its MediPay product.
"We're not focused on any recession at all. This is why we're launching Ultra as people with assets are going to want access to capital; they're going to need it fast during a recession as the bank is going to get more conservative. We want to know that we're holding on to good assets where the loan to value is good so that if we have to liquidate, we can collect our principal and interest," said Mairs in response to fears about a possible recession.
Dolla's loan portfolio was 67 per cent secured at the end of 2021 and stands at 72 per cent at the end of its third quarter. While its NPL ratio has risen from 5.3 per cent at the end of 2021 to 8.7 per cent as of September, the company's expected credit loss provision remains relatively flat as the loans which are considered non-performing are over collateralised.
Dolla's total asset base stands at $1.36 billion with shareholders' equity at $715.46 million. The company's net interest income for the nine months is up more than 230 per cent to $414.33 million while net profit is up 330 per cent to $188.01 million. Mairs believes the company will be able to on lend at least half of the bond proceeds over the next two months for Dolla. Dolla's stock price closed at $3.31 on Tuesday, which left it with a market capitalisation of $8.27 billion.
"I think it's going to be fun. I spent my time at ATL with the Porsche brand, very high net worth. It's now [about] being able to access that high net worth from a different angle, with the potential to service the same individuals. It's a new challenge but I'm really looking forward to it," Henriques closed.
- We welcome reader comments on the top stories of the day. Some comments may be republished on the website or in the newspaper; email addresses will not be published.
- Please understand that comments are moderated and it is not always possible to publish all that have been submitted. We will, however, try to publish comments that are representative of all received.
- We ask that comments are civil and free of libellous or hateful material. Also please stick to the topic under discussion.
- Please do not write in block capitals since this makes your comment hard to read.
- Please don't use the comments to advertise. However, our advertising department can be more than accommodating if emailed: firstname.lastname@example.org.
- If readers wish to report offensive comments, suggest a correction or share a story then please email: email@example.com.