Hi It’s Money Experience,
It’s APO week, month in Jamaica with Financial Services versus Food Distribution. The tale of the tape of Sygnus Credit Investments versus Derrimon Trading.
The good news for the Markets is that they are coming at different times with Sygnus set to open and close now, that is by December 23, 2020 and Derrimon in January 2021 and by January 26, 2021.
These deals again show that there is a lot of liquidity in Jamaica right now, and the theme of cash on the sidelines continues. However, it is chasing quality deals and deals with strong governance and a track record.
The deals coming to Market combined are just under J$ 7 Billion, nothing to scoff at. If their respective upsize options “hit”, the combo sizes will cruise North of J$ 8 Billion, Mega Money.
Sygnus Group
It seems pretty clear that Sygnus Credit APO seems like a done deal and the funds are already “in play” or locked up wherever it’s an underwritten deal or not. Reason being, these are some of the tightest i) Publication ii) Opening Date & iii) Closing Date timelines we have seen with any offer, much less an APO.
This is Christmas Money in its truest sense of the Markets and no pun intended.
Sygnus Group goes onto mention that the Company is doing the APO for new deals as well as to support existing Portfolio Companies.
Given the Pandemic and the effects of C19, the APO makes sense as being in the mid-sized Company market and potentially Companies that Banker credit committees declined ( that has given Sygnus an Opportunistic market ), also with C19 creates Alpha Risk for mid-sized firms. More than likely they will need one of the following or a mix and assistance with oversight of their affairs until life normalizes, i) Moratorium, ii) Additional Funding, iii) Re – Business Planning.
In recent quarters, the line item interest receivable and how this is quantified and detailed may allude to the importance of this point.
Overall, the expectation is the APO should close fast given the timelines and this should give Sygnus Credit a lot of gas or dry powder to keep its Portfolio Investments safe during the Pandemic for 2021 as we wait the Vaccine and the Mood to change in Tourism as well.
Derrimon
Is this the new Grace on its Way for 2021 or just Derrimon being Derrimon?
We think it’s Derrimon.
As Frank Sinatra would say, Derrimon is doing 2 Things for 2021 :
– They are Doing it “My Way”
– They are Taking the Business to “New York, New York”
The Company Use of Proceeds in their APO is one of the most Transparent, Upfront and Robust we can recall seeing in our financial markets and the Jamaica Stock Exchange (“JSE”) in recent years and it speaks loads to Derrimon and their future.
A lot of Prospectuses speak to the famous words or phrases of, (i) Working Capital Support and/or (ii) General Corporate Purposes.
In this Case, we are getting real transparent strategy and it’s Good and worth the read.
The Transformative Numbers:
(1) J$ 1 Billion plus for acquisition in USA
(2) J$ 1 Billion plus to pay down debts ( key move as they used is to grow over the years, but has always haunted them in the external auditor comments )
(3) J$ 200 MM to grow Delect Brand ( We really like this )
(4) A few other notable initiatives
Bottom line is, post APO this is a different Derrimon.
Derrimon really hasn’t been a very popular Company with investors since it’s listing or in the past. It has been a very quiet ordinary equity or Company doing it’s “thing” or it’s “magic” on the markets – doing deals, growing and raising financing over the years.
This APO could well be the trick to get the shares more liquid, take Derrimon to the next level with shareholders and the Market.
The Brand and the Marketing is distinctly different, upgraded and well positioned so far in the APO as compared to in previous years by the Company. In addition, already there is a lot of digital content being used to grow the Company’s brand and the top 2 Executive Directors – Derrick Cotterell and Ian Kelly.
LockIt & StockIt
*Mailpac: the earnings keep flying and keep watching them, the price is up almost 50% since results and could get better over the coming quarters especially with their best quarter yet to come. The Top 10 list is now almost fully covered by Institutional Investors.
*NCB FG: always bounces back. Historically when it takes a hit like this whether 30-50% fall off, the “smart money” that has loaded up, has always done well. History tends to repeat itself.
*Bitcoin: Surges above US$ 20,000. While many analysts are suggesting to jump in given notable investors getting in as pushing the price higher on their surging news, be cautious here. These investors got in way earlier. As the old adage states, “ if you missed the boat, stay a ground.”
*Dow Jones: Still above 30,000 points. Some concerns exist with the hottest capital markets ever and bigger and better IPO/ SPAC market happening are we getting back to a Dot Com bubble or explosion. Yes, it feels too foos to be true but the FED keeps buying and stimulus keep happening. We all know the explosion will happen but not exactly right now based on the FED this week language.
Happy investing and Happy markets.
Enjoy the It’s Money Experience.
Until Next Week!
These opinions and thoughts are solely of ItsMoneyMark and does not constitute investment advice.
Ensure to always speak to a Licensed Financial Advisor.
Thank you for reading!
ITSMONEYMARK 