Epstein issues $3b bond for Chalmers BPO centres, regional growth projects

Outsourcing Management, a business process outsourcing company which trades as itel, has raised $3.1 billion in fresh capital on the bond market, four-fifths of which will fund new projects.

The debt raise consisted of two bonds – one set to mature in 2024 and the other in 2026, ­ co-arranged by Sygnus Capital Limited and Sagicor Investments Jamaica Limited.

Twenty per cent, or $62 million, of the bond proceeds will finance itel’s working capital, while $2.5 billion will be poured into the Yoni Epstein-led company’s new Chalmers Avenue operation in Kingston, from where itel expects to operate two customer centres.

The first centre, which becomes operational in December, was outfitted by itel to accommodate 1,500 new employees. The owner-developer of the Chalmers Avenue property, Chalmers Commercial Limited, is expected to complete the second centre within two years. Chalmers Commercial itself is held by Mayberry Investments Limited and conglomerate Musson Jamaica.

“We are looking at adding a second facility at Chalmers, which will most likely start in early 2022 and be handed over in 2023,” itel Chairman and CEO Yoni Epstein told the Financial Gleaner.

The second structure will be similar to the first. It will span some 80,000 square feet and provide seating for 1,500 employees. Epstein also expects to spend US$7 million (about $1 billion in local currency) on outfitting the structure once its turned over to itel.

Together, the centres will grow itel’s workforce to 8,000, putting the company closer to its 2025 target of 10,000 employees. Some of the bond proceeds will pay for skills upgrading of the workforce, Epstein said.

The company he founded in 2012 with just seven employees has spread beyond Jamaica to places such as The Bahamas, Mexico, Colombia, United States, Canada, St Lucia, Guyana and Honduras. It has a client base of 32, but wants to add at least 10 more in three years

Epstein is also looking to expand operations in St Lucia and is mulling over growth opportunities for the recently acquired Emerge BPO, through which itel entered the markets of Guyana and Honduras. Epstein is pursuing acquisition of another outsourcing business, likely within the Caribbean, but says a deal is not expected right away, and that itel is likely to turn to the debt market again to finance that transaction.

“We are in the infancy stage. Our focus, for now, is really on organic growth at this time. But the targeted area for acquisitions will continue to be in the Caribbean. This is our backyard and we intend to be the leader in the Latin America and Caribbean region,” the itel CEO said.

Alongside Jamaica, itel is pursuing growth projects in other markets. Two facilities are under construction in St Lucia, both of which are expected to be ready by end-March 2022; while itel is investing in the Emerge operation to put itel’s stamp on the new business, which occupies a building spanning seven floors in the Guyana capital, Georgetown.

“In Guyana, we are only using two floors, and so we see Guyana as an opportunity for growth. We are investing heavily into that facility to bring it up to our standard and then to grow the business,” Epstein said.

Outsourcing Management’s growth plans has also been fuelled by an injection from PanJam Investment Limited and Portland Private Equity, which took a 15 per cent stake in the company.

Although he has chosen the private equity route for now, Epstein is still weighing the stock market as a source of equity capital, a plan that has been gestating since 2018, but going public remains an ambition due to the pandemic.

“In the next three years, you never know where things might take us in regard to listing or other types of liquidity events,” he said.

karena.bennett@gleanerjm.com