Sygnus Deneb Investments Limited has invested US$4 million ($600 million) into Chukka Caribbean Holdings Limited (CCH) to facilitate its strategic expansion into the Caribbean through its nature adventure excursions.
This was done through the issuance of convertible preference shares effective October 7. It also represents Deneb's second portfolio investment after investing US$8 million for a 40 per cent stake in Aruba, Wine and Dine (AWD) which is based in the Dutch Caribbean and a leading food and beverage business in the local market. Both Deneb and CCH are St Lucian International Business Companies (IBC).
"We have a growth strategy, and we see a lot of opportunity and untapped potential in the region and many outstanding natural assets that people want to experience. In order for us to fully capitalise on all of these opportunities and further grow our business, we thought private equity would be the right way to go. Finding the right private equity partner is no different than finding the right business partner. What we have found in the Sygnus team is the same as our own Chukka DNA, they understand people, focus on partnership, are visionaries and growth-oriented," said CEO of Chukka Caribbean Adventures Marc Melville in the press release.
The Chukka Group operates 85 tours in Jamaica, Belize, Turks & Caicos, the Dominican Republic and Barbados with Antigua & Barbuda set to be the newest destination with a US$5 million ($770 million) investment in an adventure park. Between 50 to 75 persons will be employed at the new attraction with another 15,000 Antiguans set to benefit directly and indirectly in the hospitality and tourism sector. The Chukka Group acquired Resort Solution Limited in 2020 which operates the largest water sports company in Jamaica. Some Chukka offerings include ziplining, horseback riding, all terrain vehicle (ATV) rides and water sports.
"This investment in Chukka is directly aligned with Deneb's strategy to provide growth capital to middle market firms with established track records to catalyse their growth and strengthen their capital structure and balance sheet," stated Ike Johnson, chief operating officer, co-founder and head of private equity and M&A at the Sygnus Group.
While CCH's financials aren't publicly known, PanJam Investments Limited owns 20 per cent of St Lucian IBC Chukka Caribbean Adventures Limited (CCA). CCA's revenues decreased by 20 per cent to $3 billion in 2018 while its net profit of $150.71 million in 2017 became a net loss of $146.36 million in 2018. PanJam wrote down its $345.86 million investment in CCA at the company level in 2020.
CCA's shares were also pledged as collateral to Sygnus Credit Investments Limited in June 2020. Hospitality made up 15 per cent of Sygnus Credit's US$53.60 million investment portfolio in June 2020.
"I am excited for Sygnus Deneb to be partnering with Chukka, a well-run regional company with a strong track record that has a positive impact on lives and economies in the region and represents the Caribbean brand well. Sygnus Deneb has a robust pipeline of opportunities valued at almost US$100m, that includes industries such as logistics, energy, maritime, retail, manufacturing and distribution, and we are looking to close additional deals before the end of the year," added assistant vice-president for private equity and M&A at Sygnus Capital Stephen Wright.