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Portland Private Equity won’t proceed with Portland Caribbean Fund III, which received over US$100 million in capital commitments last year, or about a third of the targeted funds.
“It is now in the process of being terminated,” said Portland partner Ricardo Hutchinson, who is also chairman of Portland JSX Limited. “Due to a number of changed circumstances, the limited partners opted to terminate the fund,” he said in comments to the Financial Gleaner.
Funds globally are facing challenges, but recent reductions in interest rates have resulted in improved outlooks.
PCF III sought to raise about US$330 million, but now that will not happen. It would have become the third successive regional fund of Portland Private Equity, which is controlled by investor Michael Lee-Chin. PCF III closed on its first round of capital commitments from leading, global institutional investors last year. Future commitments were expected to follow.
The cessation holds implications for Portland JSX, which invests in the Portland Caribbean Funds controlled by Portland Private Equity. Portland JSX had initially planned “US$32 million in capital commitments” to PCF III, according to its annual report, but the company’s latest third-quarter financial results revealed a pivot away from the partnership.
“Effective December 4, 2024, the investment in PCF III was discontinued,” Portland JSX advised in the notes of its September-November quarterly report released in January.
Increased earnings
The announcement came amid improvement in Portland JSX’s earnings. The listed company reported a profit of US$1.8 million for the third quarter, marking a turnaround from losses recorded during the same period in 2023.
However, it is still working to fully recover from its financial challenges. Over the nine-month period, from March to November, Portland JSX posted losses totalling US$745,000, which was an improvement compared to the US$9-million loss incurred in the prior year.
“Going forward, Portland JSX is committed to the same investment objectives and strategy underlying the private equity fund. At this time, investment direction and management personnel will continue to be provided by Portland Private Equity, while investments will now be made directly, with oversight provided by the board. Initiation of dividends remains a priority of Portland JSX for 2025,” said Hutchinson.
Portland JSX serves as an equity investment vehicle, working alongside affiliate Portland Private Equity, which established the Portland Caribbean Funds to invest in the Latin American and Caribbean region.
Since its inception in 2015, Portland JSX has operated as a limited partner in Portland Caribbean Fund II. Each of the Portland Caribbean funds spans around 10 years, with an initial five-year commitment period for investments. PCF II was set to conclude in July 2024 but has been extended by a year, while PCF III was initially set to run to September 2033, prior to the decision to cancel the fund.
According to Portland JSX’s financials, the Caribbean Funds include provisions for two additional one-year extensions, and its partners have already agreed to extend PCF II’s term to July 2025 amid evolving market conditions.
PCF II has performed creditably, with roughly 10 underlining private equity investments in fast-growing companies. In recent years, however, two of those companies have suffered from “self-inflicted injuries”, according to Portland JSX’s annual report. The two companies are Outsourcing Management, which operates itel in Jamaica and other markets, and Merqueo, an online grocery business in Colombia. Despite these challenges, Portland JSX remains optimistic about its ability to navigate the current market conditions.
“For accounting purposes, these injuries result in write-downs of businesses that have value markers – customers, market presence, talent, supply relationships, etc – that do not necessarily translate for accounting purposes. The current valuation of Portland Caribbean Fund II ascribes no value to several portfolio businesses, meaning that, for these businesses, there is only upside available for valuation purposes,” the annual report stated.
The value of Portland JSX, which includes its investment portfolio, stood at US$23.3 million, down from US$24 million a year earlier.
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