Portland JSX says investor patience being rewarded amid delayed returns
Fund managers for Portland JSX Limited say investor patience is being rewarded, but caution against expectations of returns, given global events and ongoing economic upheavals.
From mid-2020, with its bottom line then bleeding red, the company has been urging patience on the part of shareholders, citing COVID-19 pandemic concerns and the “lumpiness” of returns, which Portland Private Equity Managing Partner Robert Almeida said from then would delay the reaping cycle for Portland JSX investments.
This week, however, he was more bullish about the fund.
Since its market d?but six years ago, Portland JSX has paid no dividends to shareholders. Almeida offered no specific timeline as to when that will change, but indicated that the competing calls on the company’s capital was always under active consideration vis-a-vis its investment needs and the distributions to investors.
With the new release of Portland JSX’s latest quarterly report, the fund manager is touting signs of continuing recovery, saying that over the past five quarters shareholder equity has grown from nearly US$28 million to US$33 million, a 17 per cent improvement. The gain resulted from the fund’s retained earnings, that is, its accumulated profit.
Additionally, the Portland JSX’s investment portfolio has jumped to US$42 million, up from US$31 million, its May 2022 balance sheet shows. Some of the gains came from its investment in Yoni Epstein’s business process outsourcing firm Outsourcing Management Limited, which trades as itel. The preference shares acquired in itel pay interest of five per cent.
Asserting that a long-term perspective was the hallmark of successful wealth creators, Almeida said Portland was pleased with that performance, given the continuing pandemic, the war in the Ukraine, inflation, and now, recession concerns.
However, the macroeconomic outlook was still highly uncertain, he cautioned.
“Our portfolio companies continue to navigate in very turbulent times,” he said. “We continue to be optimistic that the diversification of our portfolio of businesses, combined with the quality of the individual businesses, will result in above-average, long-term returns.”
Nonetheless, he also said that inflows from the investments were under way.
“The company is starting to realise cash inflows from the investment portfolio. The board is considering the standard capital allocation options of investment, debt repayment and returns to shareholders, via dividends/share buybacks, to determine what is in the best interest of the company,” he told the Financial Gleaner.
For the year ending February 2022, Portland JSX’s revenue included US$136,000 in dividend income and a big upswing in the fair value of its investments, which doubled to US$5.3 million. Profit for the year also doubled from US$2.1 million to US$4.3 million.
For the first quarter ending May, dividend income amounted to nearly US$64,000, fair values gains topped US$1 million, and profit climbed from US$354,000 to US$793,000.
Over the investment phase of its life cycle, the Portland JSX poured US$29 million into various businesses.
The company largely participates in investments made by a regional equity fund controlled by Michael Lee-Chin’s Portland Private Equity firm. The fund, which is a limited contributor to Caribbean Equity Fund II, is in the seventh year of its 10-year cycle. It participated in investments in entities such as itel, including the US$5 million worth of preference shares acquired last year; Chukka Caribbean Adventures; Tropical Battery; Liberty Latin America; and Clarien Bank.
The company has the option of converting the preference shares in itel/Outsourcing Management to ordinary shares within three years of the investment, subject to specific conditions.
“We are most excited about the potential for the itel business,” said Almeida.
“Yoni and his team are capitalising on two trends – nearshoring and digital – and seizing the opportunity for a Jamaica-born business to scale globally. The business is investing in growth, organically and via acquisitions, as well as locally and in new countries,” Almeida said.
Alongside itel, he also described Productive Business Solutions Limited and Chukka Caribbean as three businesses in Portland JSX’s portfolio that are “exporting” Jamaica to the world.