Stratus alternative fund, an investment vehicle managed by NCB Capital Market (NCBCM), is partnering with the Development Bank of Jamaica (DBJ) to launch a private equity fund targeting small and medium-sized enterprises (SMEs) locally.

The launch of the fund marks the fifth portfolio under Stratus’s suite of alternative investment facilities which already comprises specialised funds for infrastructure and tourism-focused projects.

The new 10-year life cycle SME fund, which focuses primarily on providing equity financing for what is often considered a largely underserved sector, is to be seeded with approximately $4 billion in funding, $1 billion of which is to be supported by the DBJ.

According to Simone Hudson, assistant vice-president (AVP) of Alternatives and Fund Management at NCBCM, the launch of the fund represents a win-win for local SMEs who are usually challenged with securing adequate financing for their business ventures.

“Stratus is here to help them along their journey by not only providing funding, but also building out the ecosystem of experts that will aid in the development of the companies and their principals. For investors, it will provide an opportunity to participate in the SMEs’ growth stories at an early stage,” she stated.

“Given the successes we have seen on the Junior Market, there is sufficient evidence that equity investment in SMEs delivers value for investors,” Hudson added.

The partnership, which stems from a call for proposal (CFP) for fund managers issued back in December 2021 by the DBJ, when the State-owned entity made a call for two qualified applicants to manage funds under its SERVE programme, sees NCBCM emerging among the top picks. The experienced fund manager was chosen for its skills, expertise, governance structure and knowledge of the local financial landscape as well as its ability to mobilise funding from private sector investors.

The brokerage firm, in citing its primary objective as being centred on providing tailor-made financing, said that the new vehicle will further assist its business with offering financing in critical areas geared towards driving growth and development in the local economy.

“The establishment of this fund reaffirms our commitment to innovation in crafting bespoke solutions for our SME stakeholders. The NCB Financial Group continues to increase its avenues of support for SMEs and has built out an infrastructure to support SMEs anywhere along the capital structure.

“Private equity investment is a key area of focus for NCBCM, and through this vehicle we will be better able to deepen this type of financing among the SME segment,” commented Tracy-Ann Spence, chief operating officer at NCBCM.