Portland JSX tempering expectations
Published:Friday | September 11, 2020 | 12:09 AMNeville Graham - Business Reporter
Private equity fund Portland JSX Limited is tempering expectations on the timeline for returns as the COVID-19 pandemic ravages regional businesses, saying as much as US$80 million of expected profit share may be delayed.
Managing Partner Rob Almeida says prior to the global spread of the virus, Portland was on track to achieve its objectives for appreciation and cash realisations, but that progress has since been interrupted.
The fund, listed on the Jamaica Stock Exchange, is largely held by pension funds. Portland JSX largely participates in investments made by a regional equity fund controlled by Michael Lee-Chin’s firm, Portland Private Equity.
In its year-end financials, Portland JSX reported US$1.345 million of net profit for fiscal 2020, netted from investment income of US$2.337 million. The company had spun from a loss of US$516,983 for the annual period ending February 2019.
But soon after the wrap on its current fiscal period, the coronavirus began taking hold, with telling results for the first quarter ending May. The fund’s gross income was negative at US$1.32 million, leading to net loss of US$1.4 million.
Almeida said, however, that “this has not changed Portland’s expectations for appreciation and cash realisations”, albeit at a delayed pace.
The fund, which is a limited contributor to Caribbean Equity Fund II, is in its sixth year of its 10-year cycle. It participated in investments in entities such as itelBPO, Chukka Caribbean Adventures, Tropical Battery, Liberty Latin America and Clarien Bank.
Portland JSX is no longer making new investments, and is now in what Almeida told shareholders at their annual general meeting this week, the “gathering and harvesting phases”.
He noted that negative impacts from COVID were expected to be temporary.
“Realisations are delayed; approximately US$70 million to US$80 million of 2020 realisations that were in progress were derailed temporarily,” he said, in reference to the expected share of profits from portfolio companies.
“We’re currently working on realisations of approximately US$15 million before end of 2020. Our expectations are unchanged, although there’s a one- to two-year delay,” he told shareholders.
Portland JSX is invested in a total of 15 businesses in Jamaica and the region, across a range of sectors, such as tourism and hospitality, distribution, power generation, telecoms, and finance – diversification that Almeida said has helped to mitigate adverse economic impact, estimated at under 10 per cent to date.
“We are optimistic about opportunities for portfolio companies to outperform in recovery. There are two holdings in the eye of storm, so to speak – tourism and hospitality. At the same time, one holding is benefitting from e-commerce tailwinds,” he added.
He also reported that the impact of COVID-19 is being managed by portfolio companies through the maintenance of employee- and customer-safety protocols, business continuity practices in essential services, and liquidity management.