MFS Capital acquisition of Micro-Finance Solutions a $500m purchase
Published:Friday | July 5, 2024 | 12:07 AM
MFS Capital Partners Limited, now in the process of repositioning as a money services company, has set a goal of hitting $1 billion in annual revenue within two years.
MFS Capital CEO Dino Hinds also said the company wants around a fifth of its top-line income to flow to its bottom line as profit.
The company, formerly known as SSL Ventures prior to a change of ownership, would, basically, be starting from scratch as a business with zero revenue and losses that are still mounting.
The path to the billion-dollar target is seen as acquisitions, the first of which was Micro-Finance Solutions Limited.
The deal had been long in the making, but MFS Capital says the 100 per cent purchase of MFS Limited was effected on March 29, 2024, “at a discounted price of $500 million”.
“Based on valuation, there was an unrealised fair value gain of $287.27 million,” the company said in the filing of its third-quarter earnings report.
MFS’s book value was also said to just under $217 million.
The new purchase served to grow MFS Capital’s total assets from $65 million to $864 million, and its book value from negative equity of $2.4 million to a positive $255 million. The company also became more indebted, with $500 million of its $603 million of long-term debt being new borrowings from MFS Acquisition, the vehicle used to effect the takeover of SSL Ventures.
“Having completed the first, we have pipeline acquisitions, which we’re working through right now,” said Hinds.
“We’re very confident in terms of a number of companies that we’re working on. I can say we’re very close on some of those deals in terms of signing off,” he said, adding that another announcement would be forthcoming in about two months.
For the nine months ending March 2024, MFS Capital reported revenue of $493,000 of which $132,500 was derived in the third quarter. And the company’s losses climbed to $34 million, nearly a half of which was incurred in the third quarter.
“Our numbers will look much improved for the fourth quarter, when we have one full quarter of the operation of the acquired entity which is the first portfolio company under our belt,” Hinds said.
“Those numbers will show the revenues for the portfolio company,” he said.
Regarding the operation of the MFS Capital going forward, Hinds said the group and its member companies would be pursuing a shared-services model.
“Where we have services that are similar, we will have a division within the holding company that will take care of things such as HR, marketing and so on,” he said.
The five-member board of MFS Capital was due to go into a retreat on Thursday, July 4, but Hurricane Beryl delayed that meeting. Instead, the board will huddle on July 11.
“Out of that retreat we’ll be getting into the specific numbers. The board will also be approving targets for the executive and our business development persons,” he said.
Hinds reaffirmed that MFS Capital was no longer involved nor interested in microlending.
“To be very clear, we’re not into microfinancing. We are looking in the direction of money services, meaning remittances and cambio services.” he said.