Puerto Rico engine powers Sygnus to record profit

Sygnus Credit Investments Ltd, (SCI) doubled profit for its June year end to US$9.55 million, from US$4.28 million, led by its Puerto Rico investment firm Acrecent Financial.

“The earnings power has just been tremendous. So the acquisition and the reorganisation has really borne substantial fruit,” said Jason Morris, co-founder, executive vice-president and chief investment officer of Sygnus Capital, the investment manager, during the company’s earnings call this week.

Morris went further, suggesting that the Puerto Rico operation has become the group’s primary growth engine.

“Acrecent right now, as we speak – depending on what metric you look at, has overtaken SCI in terms of earnings power, or is right on the cusp of doing so,” he said.

Puerto Rico accounts for 37.2 per cent of SCI’s combined portfolio, compared with 28.1 per cent for Jamaica.

“We need to scale the Puerto Rico business,” Morris said. “Part of our strategy is to inject additional capital into that business to grow that business substantially. That’s the first order of business.”

He added that SCI would likely seek additional capital to support that expansion. Combined portfolio assets now exceed US$300 million, with deployment across the group’s English- and Spanish-speaking platforms surpassing US$100 million during the year.

Acrecent began paying dividends to SCI during the financial year, distributing some US$2 million through two semi-annual payments. SCI simultaneously increased its ownership stake through an additional US$2 million investment.

“Once the business continues to grow, that dividend will be bigger and bigger and bigger,” said Morris.

The group’s core earnings, measured by net investment income, rose 39 per cent to a record US$13.93 million as revenue growth outpaced a comparatively modest 7.1 per cent increase in operating expenses. Net interest income climbed 32.5 per cent to US$11.75 million, reflecting stronger deployment activity during the second half of the year.

SCI’s investment portfolio grew to US$238.8 million, up 13.8 per cent year over year, while the number of portfolio company investments increased to 46 from 38. During the year, the company funded US$40.5 million in new commitments and exited US$25.1 million in investments.

neville.graham@gleanerjm.com