Portland JSX cites global headwinds in appeal for investor patience
Private equity company Portland JSX Limited dipped into losses at year ending February, which Managing Partner Robert Almeida has linked to headwinds from changing interest rate environments and the damper it has put on business.
Since its listing on the Jamaica Stock Exchange, Portland JSX is yet to pay a dividend.
Two years ago it appealed for patience amid the pandemic, but expectations that its fortunes would have been improved enough to pay returns to market investors has not been realised.
In the current period, Portland JSX made a loss of just over US$812,000, swinging from a profit of US$4.28 million at year ending February 2022.
“The global pandemic may be behind us, economic aftershocks are currently being experienced as evidenced by inflation, rising interest rates and credit contraction,” said Almeida.
“In that context, we are pleased with the fundamental operating performance of the companies in the portfolio and remain optimistic for the longer-term trajectory of the company,” he said.
Although Portland JSX is in the reaping phase of its 10-year cycle, the company has been making new investments. Just last year it pumped US$4.5 million into Colombian e-grocer Merqueo Holdings in the form of equity, convertible debt notes and factoring facilities, and which is repayable in the future either in cash or equity. The new injection expands its holding in Merqueo which it previously took a position in around mid-2021.
Portland JSX’s 10-year cycle comes to an end in July 2024, but it has the option of extending the life of the fund for two years.
Within the reaping phase, Portland JSX’s investments through Portland Caribbean Fund II fell from nearly US$36 million to just over US$26 million in the course of the year ending February 2023.
Consequently, in the same period its overall portfolio of investments fell from US$40.8 million to US$35.8 million, inclusive of the new injection in Merqueo and a US$5-million investment in Outsourcing Management Limited, OML, via preference shares in 2021. Outsourcing Management trades as itelbpo.
Last year, Portland JSX exited two investments, cutting the number of its portfolio companies from 10 to eight. Of the US$9.5 million reaped from those exits, Almeida said US$4.5 million was reinvested in Merqueo while US$4.2 million was placed in short-term securities.
Asked what investors can expect going forward regarding payouts, Almeida sought to further temper expectations, as he did two years ago amid the pandemic, saying global macroeconomic conditions were challenging as evidenced by the failure of two large banks in the United States and the rescue of another large European bank.
Those events, he said, have cast a long shadow over Portland JSX’s portfolio companies and their operating environment.
“This will create more turbulence in the context for the companies in the portfolio, especially as it relates to access to and cost of capital,” Almeida told the Financial Gleaner.
The two investments exited last year were InterEnergy and the Panama wind farm.
The eight that remain in Portland JSX’ portfolio are: Productive Business Solutions Limited; Interlinc Group; Diverze Assets Inc/Chukka Holdings; Portland Telecom LP, which holds shares of Liberty Latin America; financial services firm Clarien Group Limited; Outsourcing Management; restaurant and food service operator Grupo IGA; and Merqueo.
Although Portland JSX generally co-invests alongside Portland Caribbean Fund II, it has done two stand alone transactions, including its second bite of Merqueo.
“The investment in Merqueo would be a co-investment alongside the fund, similar to the OML investment made previously, except that the investment in Merqueo is not funded by preferred shares,” Almeida said.
“Co-investing in portfolio companies of a private equity fund is a common practice of private equity fund investors and a part of the company’s investment strategy,” he added.