SYGNUS private equity investment fund, “Sygnus Deneb”, is looking to continue expanding its investment portfolio by raising US$20 million to deploy in a strong investment opportunity pipeline.

“We are raising $20 million to continue the growth of our private equity investment company. A part is seeing strong demand by companies for equity investments, and the company currently has a pipeline of US$50 million which spans six sectors,” said chief executive officer of Sygnus, Berisford Grey.

These six sectors include energy, distribution, financial services, logistics, food and beverages services, and oil and gas.

Sygnus Deneb has so far built up a portfolio of investment in companies that include some household names such as Chukka Caribbean and other strong companies in the Dutch Caribbean. Three more companies are in the advanced stages of negotiation, and according to Sygnus the closing period for these deals is imminent.

“We literally have complete due diligence signing documentation and we are maybe four to six weeks away from closing others are in the due diligence phase,” Grey said in an exclusive interview with the Jamaica Observer.

Sygnus Deneb is a private placement under the exempt distribution guideline, and the minimum investment is US$100,000 or the equivalent in Jamaica dollars.

“We are going to be offering at US$0.11 cents per share or $17,” said Grey.

The minimum subscription will be 1 million shares. He explained that about US$40 million is actually needed. However, the process to invest takes a long time, and rather than securing capital and sitting on it for years, Sygnus has developed a strategy to do business in phases through which all investors can benefit.

“It takes between three to nine months, and probably longer, to close a deal. We don’t want to raise too much capital, sit on it, working through acquisitions and can’t deploy your money. So, we want to raise the right amount of money, close the transaction, deploy your capital so that it works for you, and then come back and raise more money to add to the portfolio,” he explained.

The deal opens on May 30 and closes on June 30. The private equity company Sygnus Deneb was founded in 2019 and launched in 2020. However, Deneb was slowed during the pandemic and Sygnus sat on the investment, observing the space for two years, and is now moving forward with its plans.

Grey explained that prior to COVID-19 the stock market started off great, however private equity offers a different value for the proposition because investors are subject to market volatility within a publicly listed stock.

“I was just looking at the stock market numbers. Over the last three years the average return on the stock market was -9.9 per cent or so, and year to date it’s -6.8 — and that’s not only Jamaica, that’s right across the world,” he said to a room full of potential investors.

Sygnus says private equity protects investors from such market volatility and offers long-term capital appreciation in solid companies.

“Our strategy focuses on growth capital so here we look for medium-size firms that are on the cusp of growing very rapidly, especially those involved in FX earnings, export markets etc — that’s growth capital. We take a position in that firm,” he said while explaining how Sygnus Deneb intends to choose its investments.

The next is a buyout, and the riskier part of their strategy is an investment in an asset that is underperforming.

“Most of the time it’s because of poor management and — to a certain extent — underfunding. And you can go in, acquire cheap, and then create value,” he added.

He said the strategies are designed to ride out whatever business cycle exists.

Sygnus Deneb’s targeted return on equity is 18 per cent. According to Grey, Sygnus Deneb will not be interested in any investment that has no positive cash flow or profitability.