Tue | Nov 20, 2018

ISP Finance raises $75m for Christmas lending

Published:Wednesday | October 17, 2018 | 12:00 AM
In this July 27, 2017 photo, ISP Finance CEO Dennis Smith (left) and Director Diyal Fernando converse at the company's annual general meeting.

Microfinance company ISP Finance Services Limited has raised $75 million of debt for lending during its busy Christmas season.

Existing funds available for lending were mostly utilised during the back-to-school period, the company said.

"We met the demand for back to school but need more funds for the Christmas season. During this time, more persons borrow and have things to do," said Director Diyal Fernando.

The $75-million bond, which matures in 36 months, was secured against the company's assets. However, the coupon

rate was not immediately ascertained. The company last issued a $150-million bond in December 2016, which matures next September. It pays interest at 10 per cent per annum.

"In hindsight, we probably should have raised more. But we wanted to be cautious, and did not want to borrow too much and get stuck with it," said Fernando, regarding the 2016 bond.

Given the growth in the company's loan book since then, he said it would have been better to raise between $200 million and $250 million at the time.

ISP now manages a loan portfolio of $567 million, reflecting growth of 36 per cent year-over-year to June.

The microfinancing firm's profit for the June quarter, however, remained flat at $10.4 million on net interest income of $68.1 million. It lends to consumers at rates of between 20 per cent and 50 per cent, depending on the project and risk.

"The loan base has grown more and more, and we did not have enough for lending, so this loan will go towards lending," said Fernando.

Two years ago, ISP announced plans to build out its branch network, but over time the company realised that a more cost-effective method would be to utilise online platforms and a mobile app.

"So we are looking at technology to service the market in the same way," said Fernando, who hopes to see the app released by year end.

The company, which went public and listed on the Jamaica Stock Exchange in March 2016, continues to contemplate acquisitions, but has yet to announce any definite targets.

steven.jackson@gleanerjm.com