VM Investments Limited (VMIL) says its deployment of capital into diverse investments has paid off despite facing a challenging economic environment.

The company saw its second-quarter performance improve when compared to the same period in 2021, with operational revenues up 47 per cent as at June 30, 2022, or amounting to $225 million. Further, net profit grew by 38.56 per cent, or $67 million, to $67 million.

VMIL Group Finance Manager Voneil Wynter, speaking to a virtual audience during an investor briefing last Wednesday, said this improvement was “driven by growth in fees and commission income and gains on investment activities”.

During the quarter, which ended June 30, 2022, VMIL and its subsidiary VM Wealth brokered a reverse takeover of SSL Venture Capital by MF Acquisition, an initial public offer for Dolla Financial, and an additional public offering for Kingston Properties. The investment house also acquired a private equity stake in manufacturing company Home Choice Limited and launched a private equity fund — Jamaica Actus Small & Medium Enterprises Fund (JASMEF) — along with London-based Actus partners.

Moreover, the company completed the acquisition of property, which VMIL CEO Rezworth Burcheson said will provide investors in VMIL’s Property Fund with attractive returns.

“Earlier this we closed on a US$18-million transaction. That investment in many respects is an opportunity for the property fund that will provide hard-currency earnings at very attractive yields, so investors in the property fund will continue to earn world-class returns,” he said.

Though careful about sharing too much information on the property acquisition, the CEO revealed that the property is being utilised for business process outsourcing activities.

He, however, boasted that already the company’s real estate/property fund is among the top-performing products in the market while pointing out that the company is still looking for other opportunities.

So far, Burcheson noted, “We’re seeing some opportunities in the commercial space that we’re exploring, and while we can’t exactly disclose what exactly those opportunities [are], later in 2022 and the ensuing years we’ll realise value from those investments.”

Commenting on the launch of JASMEF, Burcheson said the private equity fund provides more opportunities to resolve the issue of access to capital for small businesses, and “will provide a lot more value for companies [who access financing] as they go through their life cycle”. Moreover, he pointed out VMIL’s US$10-million investment in the fund, coupled with an additional US$5 million with Actus Partners through the Development Bank of Jamaica and the World Bank, was an indication of the company’s “confidence” in the MSME sector.

“So, certainly lots of positives and for the remainder of the year. I think we’re gonna hasten the pace because we’re seeing lots of opportunities in the space,” he added.

Other developments Burcheson highlighted included the expansion of microfinancier Carilend into Trinidad and Tobago, and MoneyMasters Limited signing VMIL as lead broker “for a major transaction”.

“So if you look through our annual report, we indicated a number of things we wanted to focus on for this year — key imperatives for the business,” the CEO said.

“One was to ensure integration of [our] asset management platform in Barbados is complete,” he said, referring to the VMIL’s acquisition of a 100 per cent stake in Barbados-based Republic Funds.

At present, VMIL is awaiting regulatory approval for the acquisition and is not certain at what point this will be forthcoming.

Although Burcheson pointed to “turbulence” and “economic headwinds” affecting capital markets, he said there are still opportunities in wealth management.

Responding to a question on dividends, he said that given the challenges in the capital market space the company decided to suspend its dividend payment policy to support capital growth rather “than return capital to shareholders and become compromised”.

Supporting Burcheson, VM Group CEO Courtney Campell asserted, “We have to bear in mind that the current environment is highly volatile; there’s a great deal of uncertainty. We don’t know where global inflation will go, we don’t know if and when we’ll go into recession, we don’t know what will happen to interest rates — and all of those factors impact on the investment instruments that we hold.”

He added: “And because of that great deal of uncertainty it would make sense for us to ensure that we have a strong buffer to be resilient in these circumstances. So, we want to ensure that the business is strong through this short-term period into the medium term, and that’s why I think it’s prudent to suspend dividend payments for the time being.”

For the second-quarter, VMIL’s return on equity grew by 27.94 per cent compared to 16.75 per cent in 2021, with corporate finance and advisory service activities contributing signfificantly.

Wynter, however, disclosed that the company had a reduction in investments and resale agreements because of market conditions. “Despite the challenges in the market that negatively impacted a number of balance sheet line items, we had a strong Q2 performance led by earnings from fees and commission income,” she said.

Earning per share increased to $0.16, up from $0.12 in 2021.