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$1.5b Dolla Financial bond fuels Caribbean business search

Microlender Dolla Financial Services Limited plans to open a second location in Guyana, the Caribbean country that is located on the South American mainland, where it has operated since early last year.

The second Guyana shop is part of Dolla’s regional expansion drive fuelled by its recent upsized $1.5 billion bond offer. The bond proceeds are intended to enable the company to double its $1 billion loan portfolio.

“We are looking at a second location in Guyana now, a place called Berbice,” said Dolla CEO Kadeen Mairs, speaking at the online Mayberry investor forum on Wednesday.

The company operates 10 locations – nine in Jamaica and one in Guyana. Its most recent location was set up in Portmore, St Catherine.

Berbice is a region located in eastern Guyana bordering Suriname.

Dolla opened its branch in Guyana almost two years ago and the company is reporting that the business there has grown “exponentially”, reaching $100 million in loans last year.

The only thing holding back more growth in the country that recently became an oil and natural gas-producing nation, is additional cash for deployment, the Dolla CEO told forum host Dan Theoc, Mayberry Investment’s senior vice president.

Mairs recently returned to Jamaica after scouting potential locations in The Bahamas and Turks & Caicos Islands, where he had travelled with Dolla director Chris Yeung on a hunt for new Caribbean business.

“We are visiting different markets and speaking to people who operate in those markets, to see what the climate is like,” said Mairs.

“We are definitely looking at some countries now and as soon as that becomes material, then we will definitely announce something,” he added.

In July, Dolla announced its intention to raise $1 billion in a private placement, with the option to upsize to $1.5 billion. The company expects to conclude the transaction within weeks and to deploy the funds for lending to customers by year-end.

“We will be raising that $1.5 billion and when we raise it, that will double our loans portfolio, and double or net income,” Mairs said, pointing out that the business expects to deploy the cash at a rate of about $300 million a month.

“By the end of the year, all of that money raised will be on the road. The lending business is definitely a business where you have to be constantly raising funds, once there is a demand. We are anticipating that by the end of the year we can deploy that capital,” he said.

The company had raised approximately $230 million net of expenses in its initial public offering in June when it listed on the junior market of the Jamaica Stock Exchange. Those funds were fully deployed for lending within one month of the raise, Mairs said.

“The demand for loans has doubled and tripled,” he reported, noting that the brisker business had arisen from increased publicity from the IPO and increased marketing and advertising by the company.

Dolla’s capital almost doubled to $653 million at June 2022 from $373 million in March 2022, and rising more than 20-fold from $30 million at June 2021. That capital growth came largely from the near tripling of its loan portfolio in a year to $1 billion from $379 million.

“We are looking to put in the work to make our shareholders happy,” said Mairs, who started the firm in 2009 before selling majority stake to investment and brokerage firm Stocks and Securities Limited in 2016 and being tapped to continue running it.

He was also kept on as CEO when the business again changed hands, being bought two years ago by Private equity firm First Rock. Dolla has scaled most rapidly since its acquisition by First Rock.

Last month, Mairs wrote to the board of rival microlender Access Financial Services expressing an interest in exploring a 100 per cent acquisition of the business, an overture that has so far been rebuffed. Access, which has been trading in the JSE junior market since 2009, has $2.9 billion in capital, operates 15 branches and has holdings in Jamaica and Florida in the United States.

“As a moneylender, one that wishes to grow through acquisitions, we want to ensure that we have liquidity so that when the opportunity comes, we can look at it and cherry pick the best loan portfolios,” said Mairs.

The microfinance sector in which dollar has become a major player, is expecting mergers and acquisitions, spurred on in part by the implementation of new Bank of Jamaica regulations for microlenders.

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