SYGNUS Credit Investments (SCI) says it has now completed the acquisition of Puerto Rico-based Acrecent Financial and is now turning to integrate the entity into its operations.
The acquisition, which was completed on February 28, was done through its SCI Puerto Rico subsidiary for a consideration of a little over US$21.2 million for a 93.66 per cent stake in the entity. The management of Acrecent will retain 6.34 per cent of the company and is also entitled to an earnout, which will only be contingent on the attainment of agreed financial targets. Earnouts are normally agreed on during acquisitions if the seller is asking for a price which is more than a buyer is willing to pay and is normally tied to the acquired company achieving certain financial goals.
The deal for SCI to acquire the Puerto Rican company was first announced in late December. It was approved by the Office of the Commissioner of Financial Institutions (OCFI), the Puerto Rican regulator, on February 18, 2022.
Jason Morris, executive vice-president & chief investment officer at Sygnus Credit Investments, told the Jamaica Observer that the expectation is that with the acquisition the move now is to “enhance shareholder value while rapidly growing and expanding the business”. Morris said the next step is to “integrate Acrecent into SCI”.
He added that the company plans to deliver on the strategy that was outlined on the last quarterly earnings call: (i) Integrate Acrecent into SCI and work with our new partners to enhance shareholder value and increase SCI's ROE. (ii) Rescale SCI's growth path: Acrecent is in a US$100-billion economy and represents a much faster scaling vehicle than all of SCI's current regional footprint combined (iii) build relationships with international partners, a process that has already begun (iv) get approval for and execute the share buyback or equivalent programme to further enhance shareholder value, a work in progress. While we are doing these strategic initiatives, we will continue protecting existing portfolio investments and raising and deploying capital in the regular way.
Acrecent Financial, a licensed financing and leasing company focused primarily on the senior secured private credit market for small and middle-market businesses in Puerto Rico, was founded in 2003.
It is said to have a private credit portfolio of at least US$60 million and assets under administration of at least US$125 million.