Portland JSX actively seeking more acquisition targets
P ortland JSX Limited has cycled back into its investment phase, taking a small stake worth US$52,534 in a Colombian speciality food company on March 4, according to a disclosure in its newly released audited results. In keeping with its alliance...
P ortland JSX Limited has cycled back into its investment phase, taking a small stake worth US$52,534 in a Colombian speciality food company on March 4, according to a disclosure in its newly released audited results.
In keeping with its alliance with its sister fund, Portland JSX’s investment represented its contribution to the US$363,512 paid by Portland Caribbean Fund II for a stake in Merqueo SAS.
In operation since October 2015, Portland JSX announced last year that it had completed its investment cycle and was in its ‘reaping phase’ – after pouring US$29 million into 15 businesses through Fund II.
But with some of those funds tied up in hospitality companies that were hardest hit by the pandemic and business in general being under pressure, it derailed and extended by up to two years the pace at which Portland JSX expected to earn returns from the investment. And the company began hinting earlier this year that it was changing tack.
Merqueo is the first manifestation of that recalibration. And Managing Partner for Portland Private Equity Robert Almeida affirmed this week that Portland JSX was actively on the hunt for even more investments.
Fund II had anticipated collecting around US$70 million in returns on investments in 2020, of which Portland JSX would have been entitled to about 15 per cent, but the pandemic derailed the timing of those flows.
Portland JSX ended up disclosing at the start of this year that it had been apportioned a US$977,000 share of a US$6.19 million distribution collected by Portland Fund II last December. However those flows were not reflected in JSX’s audited results for year ending February 2021, only a US$128,900 distribution from Fund II that had previously been booked in November 2020.
The company turned a larger profit at year ending February 2021, with earnings of US$2.1 million, or 68 cents per share, up from US$1.3 million, or 43 cents per share, in FY 2020.
“The fund is doing well, and value and realisations are expected to accelerate,” Almeida told the Financial Gleaner.
Asked about the likelihood of an extension of the fund, Almeida did not answer directly, but left open the possibility of an additional public offering, or some other equity transaction that the conversion terms of a new $600-million bond issued by Portland JSX allows for.
Portland JSX was initially reluctant to speak about the terms of the debt raise, but its financials indicate that the privately placed bond was negotiated at 8.0 per cent per annum and will mature in five years, in April 2026. It was used to retire debt owed to VM Wealth Management, which was costing Portland JSX 9.95 per cent to service.
Portland Caribbean Fund II also tapped the capital market for $1.33 billion recently, through a USD Indexed Fixed Rate Secured Investment Note.
“Having completed the refinancing, the company’s capital and liquidity positions are strong,” said Almeida. “Interesting opportunities are presenting themselves. Portland Private Equity is actively engaged with the board and will consult with the shareholder advisory committee in relation to these strategic options,” he said. Portland Private Equity controls both Portland JSX and Fund II.
The US$29 million that Almeida said was invested by Portland JSX in 15 businesses in Jamaica and the region had an estimated fair value of S$31.4 million at February 2021. The companies span the tourism and hospitality, distribution, power generation, telecoms and finance sectors.