On the heels of Sygnus Credit Investments Limited’s (SCI) acquisition of Puerto Rico-based Acrecent Financial Corporation in December 2021, Sygnus Capital Group will not only expand its alternative investment platform through Puerto Rico, but will also expand its investment banking capabilities in Puerto Rico as well as the wider Caribbean region.
“Twenty-one was a very good year for Sygnus’ investment banking division, as we arranged and closed over $25 billion or US$170 million in transactions for our alternative investment platform and our financial market clients. We have also been able to create interesting and very innovative structures for our customers in order to meet their specific needs. For example, we created a structure that had never been done before in Jamaica, namely convertible credit-linked asset-backed preferred shares. The conventional or traditional definition would say that preferred stocks are equity investments and therefore should not be guaranteed. We were able to create a structure where the gain or the saving of those preferred shares was tied to another asset or the performance of the business,” said senior vice president and head of investment banking Gregory Samuels in an interview with the Jamaica Observer.
Deals closed in 2021 surpassed $15 billion in deals completed in 2020. The investment banking team closed deals across the region from locations including St. Lucia, Bahamas, Barbados , the Cayman Islands and the Dutch Caribbean.
Sygnus seeks to expand its alternative investment capability and deal-making capability in 2022 by building partnerships across the region and building relationships with multinationals. One challenge that others refused to tackle was the ongoing currency issues in Trinidad and Tobago (T&T).
“Hopefully this year, soon, we’ll make our first two investments in Trinidad and the reason we’ve taken the time is because of the whole set of structural challenges in FX. There are many ways to mitigate currency risk.One way is to use the capabilities of regional banks through mortgage structures that secure offshore deposits against local currency investments in restricted markets.For these two potential investments in question, we were able to build a hedging structure into the transactions to mitigate currency risk,” Samuels explained.
Asked about the considerations for Guyana, he explained: “We are cautiously optimistic on Guyana at the moment. We looked at some potential opportunities that fit perfectly with our investment strategy. We haven’t entered yet because it’s a market we’re still learning. However, a lot of good things are happening there, especially in the oil and gas field. The market is on the verge of supernormal growth this year and we are trying to find the right partner to work with to make our first investment.
Another area that Sygnus is also looking to expand through its alternative investment platform is impact investing which tends to consider ESG (environmental, social and governance) objectives. According to data from Refinitiv Lipper, more than US$649 billion has been deployed in ESG-focused funds worldwide through November 30, 2021. These focus on sustainable investments aimed at creating jobs and take into account the positive impacts on the environment.
“We plan to leverage our subsidiary and relationships in Puerto Rico to leverage some of this impact and ESG-like finance in other markets where we operate. Jamaica as well as the Caribbean (English, Spanish and Dutch) are the best for impact investing. We are currently talking with a leading multilateral organization,” Samuels explained of the burgeoning space in the region.
Samuels also explained, “We would have gone to several other jurisdictions doing some interesting things for the government and government entities lately. We recently did a factoring transaction which was very unique unlike traditional factoring where you buy the actual receivables, it was a more esoteric type structure where you buy the future flows based on project performance.
The investment banking team has grown from Samuels and CEO Berisford Gray to five members exploring different opportunities for growth. Sygnus Capital launched in July 2017 and has grown its cohort from seven to 33 members with further expansion plans in the future. The company is the investment manager of SCI, Sygnus Real Estate Finance Limited and Sygnus Deneb Investments Limited. SCI and SRF are listed companies on the Jamaica Stock Exchange (JSE) with assets of $110.34 million ($17.11 billion) and $10.25 billion ($65.85 million), respectively. .
According to a study by PricewaterhouseCoopers (PwC), the alternative investment market is estimated at US$13.9 trillion worldwide, including US$2.4 trillion in private debt.