Eppley Fund Managers Limited (EFML) has successfully closed its bid in the Eppley Caribbean Property Fund Limited SCC – Development Fund (CPFD) which will see its position increase from 145,000 cellular shares to 24,480,503 cellular shares or 45.04 per cent of CPFD.

The 24,335,503 shares were deposited between January 27 to March 27 with EFML to take up and purchase all deposited shares. Once confirmed as valid by the Barbadian Stock Exchange (BSE), EFML will have the largest interest in CPFD. Prior to the offer, the top 10 shareholders owned 40.59 per cent of the stock with directors Nicholas Scott, Paul B Scott and Melanie Subratie expressing an interest to accept the offer.

Based on the BDS$0.21 offer price, EFML will pay BDS$5.11 million or $388.39 million at a $76-1 exchange rate. As per CFPD’s disclosure, payment will be made for the deposited shares by April 27.

“We’re also creating a lot of value for any shareholder which remains and we’re demonstrating with our own capital that we will eat our own cooking. We will do so even at a significant premium to the market price because the underlying assets are very high quality with a bright future and we’re putting our money where our mouth is,” said chairman of the Eppley Caribbean Property Fund Nicholas Scott at an Eppley investor briefing held in February.

CPFD owns land and residential real estate spread across Barbados, St Lucia and St Vincent and the Grenadines with nine properties. Its total asset base stood at BDS$18.83 million ($1.43 billion) with shareholders equity of BDS$18.48 million. The fund recorded a higher net loss of BDS$133,884 for its first quarter compared to the BDS$98,031 loss in the 2021 period.

The shares of CPFD traded on February 17 and 21 on the BSE at BDS$0.17, which is half of the net asset value (NAV) of BDS$0.34, reported at the end of December 2022. The purchase by EFML represents a 62 per cent discount on the NAV and can accrue as a gain on investment depending on how it is accounted for in the subsequent quarterly financials.

It’s also unknown if EFML’s interest will now make CPFD an associate representing ownership between 20 to 50 per cent and significant influence, but not control or a subsidiary based on the fact that EFML owns 100 per cent of the common shares of the Eppley Caribbean Property Fund Limited SCC. EFML is a wholly owned subsidiary of Eppley Limited.

While General Manager Justin Nam noted that there was no intention to cross list the shares like that of the Value Fund, he noted, “There is no plans for any changes in the mandate as at now. It’s us investing and showing we have confidence in the NAV that’s published and giving opportunity for investors to obtain liquidity in shares that are thinly traded on the Barbados Stock Exchange.”

The Value Fund (CPFV) has repurchased 55.36 per cent of the stipulated 3,800,000 cellular shares target under its share buy-back programme as of April 3. This follows its purchase of the remaining 50 per cent interest in 693STR Limited in December with it now owning BDS$135.81 million in total assets across Jamaica, Barbados and Trinidad & Tobago. Its shareholders equity stood at BDS$104.25 million with its NAV at BDS$0.77. Its net profit increased by 49 per cent to BDS$1.63 million for the first quarter on the backdrop of BDS $2.45 million in total investment income.

Vice-president for real estate and infrastructure at Eppley Denise Gallimore said, “We continue to evaluate opportunities across the region. We know that there is increased interest in Guyana, for example. That’s one of the fastest growing countries in the region. We don’t currently have any investments there. However, the opportunity exists for us, and we continue to look at that.”

Growing investment vehicles

Apart from the Eppley property fund, it’s also looking to grow the Caribbean Mezzanine Fund II Limited (CMF II) and Capital Infrastructure Group Limited (CIGL) with its co-managers NCB Capital Markets Limited (NCBCM) and Jamaica Producers Group Limited (JP Group). Eppley has a 50 per cent interest in CMF II through Paynter (Jamaica) Limited, has a 50 per cent interest in the class B management preference shares in CIGL and owns 50 per cent of the common shares of Capital Infrastructure Managers Limited.

It’s unknown as to what percentage of common shares Eppley currently owns in CIGL, but JP Group’s 2022 audited financials revealed that it owned 12 per cent of the common shares or 2,400 shares valued at US$2.4 million with 11,000 preference shares valued at US$11,000. It was also noted that on November 22, JP was called upon to make US$612,000 in payments by January 30 for shares at the reporting date. This was during the same week CIGL was made public and engaged in the US$77-million treatment plan through Rio Cobre Water Limited.

While Scott didn’t elaborate on the upcoming opportunities for CIGL at the February briefing, he did say, “You can expect that throughout the English-speaking Caribbean, and in Jamaica in particular, CIG will be playing a role in financing areas like water, renewable energy and other forms of infrastructure. We don’t have any announcements to make at this time, but you should expect to see more of what has been in the public domain, more projects that are akin to the Rio Cobre project.”

CMF II currently has a US$40-million diversified portfolio and has paid US$6.1 million in dividends since inception in 2017 as CMF I. It generated an internal rate of return (IRR) of 14 per cent for 2022 which was above its 11 per cent target. The presentation highlighted some of CMF II’s investments focus on secured loans, equipment leases, subordinated debt, convertible debt and receivables factoring. It also highlighted investments in North Star and Pelican Power at UWI, Mona as investments.

Financial and food conglomerate GraceKennedy’s 2022 audited financials revealed that it had a 50 per cent joint venture in Pelican Power Limited which it sold during the year. The net proceeds from the sale amounted to $346.16 million with a gain on sale of $170.53 million.

With no debt on its balance sheet, CMF II is looking to execute a private placement in early 2023.

“The fund is private, so I’m not able to disclose, but what I can say is that between NCB Capital Markets and Eppley, our pipeline is well in excess of the cash we have. We’re in the process of determining the appropriate time with our partner NCB Capital Markets for a raise sometime this year,” said assistant vice-president for credit Adam Hugh.