Portland capital falters, marked down by market conditions
Published:Friday | July 26, 2024 | 12:08 AMSteven Jackson - Senior Business Reporter
Investment fund Portland JSX Limited expects capital recovery within 18 months.
Its capital has dipped by one-quarter in the past year.
“We anticipate that there will be recovery in the equity as the value of the investment portfolio increases in the next 12 to 18 months; however, this is subject to the valuation process which, as you know, is a trailing measure and also one that takes into account factors that are outside of our control,” said Doug Hewson, managing partner at Portland Private Equity, PPE, in an interview with the Financial Gleaner.
Portland JSX’s capital dipped from US$31.4 million in February 2023 to US$24 million in February 2024 to US$23 million in May 2024, its financial reports show. That equates to a 26 per cent slide.
The capital markets are under pressure, with stocks and bonds losing value to more attractive returns from government paper. Investment companies are required to write their investments up or down based on market movements.
Portland thinks that by 2026, the capital will recover and surpass 2023 levels. Two investments were recently written off by Portland JSX, related to Merqueo, the online grocer based in Colombia, and Outsourcing Management Limited, which trades as itel and is based in Jamaica.
Capital fluctuations are the nature of the business, said Hewson. The company currently holds sufficient liquidity to fulfil its obligations, and the firm can raise more funds if needed, he added.
On July 12, Hewson resigned from the board of Portland JSX Limited but remains a manager at Portland Private Equity, which is the investment manager for Portland JSX. Ricardo Hutchinson was appointed a director and succeeded Hewson as chairman of Portland JSX, also on July 12.
“We anticipate some recovery in the investment portfolio, which will positively impact equity capital. Should the manager and directors in the future determine that the company requires additional capital, all options will be explored, including debt and equity,” he said.
During the first quarter ending May, Portland JSX recorded a loss of US$1 million; however, it was a better outcome relative to the US$7.3-million net loss in the May 2023 quarter.
Portland JSX is a feeder fund to Portland Caribbean Fund and both are managed by Portland Private Equity, the principal of which is businessman and investor Michael Lee-Chin. When investment targets are identified, both funds co-invest in the venture.
Portland Caribbean Fund focusses on acquiring stakes in fast-growing companies in the Caribbean and Latin America.
In Jamaica, pension funds are the largest shareholders in Portland JSX, which serves to broaden their investment portfolios to indirectly hold large chunks of overseas assets that otherwise would violate legal or regulated caps on foreign investments.
“We anticipate that going forward, the investment portfolio will see an increase in value as market conditions and company-specific factors improve,” Hewson said.