Supreme Ventures Limited (SVL) has taken a 15 per cent stake in Dolla Financial Services Limited as it expands its partnership in Junior Market companies listed on the Jamaica Stock Exchange (JSE).

“This move continues to be in alignment with SVL’s growth strategy, which has expanded beyond the gaming market and has been making headway into other growth industries with significant potential to meet the ever-growing needs of an eclectic consumer base,” SVL said in the disclosure on Monday.

This translates to 375 million shares purchased by SVL on July 24. However, the disclosure stated that a connected party had sold 600 million shares, which means that 225 million shares were sold to another unknown party.

The sale of Dolla shares was also not reflected on the JSE open market transaction list nor on the block trades section of the daily trade sheet. However, the trade makes SVL Dolla’s third largest shareholder.

When the Jamaica Observer contacted SVL Executive Chairman Gary Peart about the deal, and other matters, he declined to comment.

Peart is the CEO of Mayberry Investments, the parent company of Mayberry Jamaican Equities Limited (MJE). MJE holds an 18.54 per cent stake in SVL and 0.9 per cent stake in Dolla as of June 30, plus a 9.96 per cent stake in Main Event Entertainment Group Limited.

This Dolla acquisition comes on the heels of SVL acquiring the remaining 44 per cent stake in McKayla Financial Services Limited for $68 million during the second quarter. This made it a wholly owned subsidiary of Supreme Ventures Fintech Limited which trades under ‘Evolve’.

Like Dolla, McKayla is a microcredit company, and Dolla has a microcredit licence from the Bank of Jamaica (BOJ), while McKayla is still awaiting BOJ approval.

This is SVL’s second sizeable Junior Market acquisition following the April 2021 purchase of 10 per cent or 30 million shares in Main Event Entertainment Group at $3.50 to become the second largest shareholder. Main Event’s stock price increase in the first six months of 2023 added $219.60 million in fair value gain to SVL’s income statement. SVL is also set to receive a $3-million dividend on Friday from Main Event.

On Monday, FirstRock Private Equity Limited Managing Director Christopher Yeung confirmed that his company was the connected party which sold the shares to SVL. While Yeung did not disclose the price at which the shares were sold, he did note that it was part of the normal course of business for the firm, which takes equity stakes in growing companies and realises exits at later dates.

“First and foremost, our normal course of business is buying and selling stakes in companies. So, this was just a normal transaction for us. In terms of the buyer, we think SVL is an extremely solid, strategic partner for Dolla. They bring a wealth of experience and an abundance of knowledge to the forefront. They will also help to grow the company and ensure our vision to become the leading microlending company in the region in a more expeditious way,” Yeung told the Business Observer.

He said that SVL’s entry as a strategic partner will come in handy as the microcredit company seeks to grow further in other Caribbean countries. Dolla is currently awaiting BOJ approval to expand to Barbados and St Lucia, which will have an initial outlay of $150 million for each country.

“Dolla needs another strategic partner to help us to get to where we want to get to in terms of being the leader. The loan book is at $2.7 billion, and we need a strategic partner to come on board to push us and get us to $5 billion. Supreme have proven themselves over and over, and their growth strategy fits us perfectly,” Yeung said.

While he did not provide any additional details about the strategic support, he said that SVL is likely to commit to a multi-billion-dollar deal with Dolla in short order, which is in line with SVL’s growth path.

Dolla’s asset base closed June at $2.82 billion with only $111.32 million in cash and short-term deposits.

SVL had $2.09 billion in consolidated cash at the end of the June quarterly report and was seeking $3 billion in a private placement of unsecured corporate bonds which was slated to be closed Tuesday. The use of proceeds included funding the commencement of operations in Ghana, providing working capital for the SVL Group, and to cover costs related to the raise.

SVL Vice-President of Legal, Regulatory and Compliance Katherine Francis was appointed to Main Event’s board of directors last September. However, any additional appointment to Dolla’s board would require BOJ approval.

FirstRock PE originally acquired 75 per cent of Dolla in January 2021 for US$1.1 million ($158.88 million) before selling 187.5 million shares for $1 in Dolla’s May 2021 initial public offering. This left FirstRock PE with 60 per cent interest in Dolla which resulted in the company collecting $86.40 million in dividends since December. This sale will bring down its stake in Dolla to 36 per cent and result in it no longer recognising Dolla as a subsidiary. At any price range between $1 and $2, FirstRock PE would have netted anywhere from $600 million to $1.2 billion from the transaction.

Following the acquisition of Optimum Trading Limited earlier this year, Yeung had highlighted that another private equity deal is likely to occur by the end of this year.

“We’re looking at two acquisitions now. We’re under NDAs (non-disclosure agreements) with the parties, so I won’t be able to reveal any names, but we’re looking at two acquisitions right now. Both of them are outside of Jamaica, but in the Caribbean region. So, assuming the due diligence, which we’re in right now, goes as planned, we should be acquiring at least one more business by the end of this year,” Yeung had explained.

The SVL news sent Dolla’s stock price up on Tuesday, halting at $2.45 at 10:09 am. Dolla ended the day up 12 per cent at $2.38, which gave it a market capitalisation of $5.95 billion. Dolla recently declared a dividend of $0.025 to be paid on September 1 to shareholders on record as of August 18.

“We welcome Supreme Ventures on board, and we think it’s going to be rewarding for everybody. Dolla needs a funding partner, and SVL has deep pockets. So, we believe that the wealth of experience and funding, it’s a mutually beneficial relationship for both of us. We’re still the largest shareholder in Dolla and we believe in Dolla, but we need a partner to catapult us to be the leading microlender,” Yeung said.