ISP Finance Services has reached an agreement that will see the microlender acquire parts of the loan portfolio from an anonymous entity before the end of the year.
The size of the portfolio to be acquired was not disclosed and the efforts of the Financial Gleaner to get more information about the transaction from the ISP failed until press time.
The deal comes amid a restructuring of the microfinance sector, which has sparked discussions over takeovers and partnerships as vulnerable payday lenders attempt to scale up their operations for central bank oversight in the area. less than a year, from August 2022.
The high cost of complying with regulations under the new microcredit law, in addition to soaring loan losses across the industry due to the inability of clients to repay their loans throughout the pandemic, forced the closure of a few microcredit companies, but at the same time created opportunities for others to grow.
ISP Finance Chief Financial Officer and General Secretary Diyal Fernando previously said the company was looking for inorganic growth opportunities in the first half of the year after announcing that ISP had secured the services of a bank anonymous investment to help structure a potential merger and acquisition, or M&A, transaction. ISP Finance is also looking to grow its business organically through an expansion of its loan offerings and footprint across Jamaica.
As for the current deal, IS did not disclose in a statement that the deal gives it the right to purchase certain existing loans from a “medium-sized loan portfolio”, and that the transaction is expected to be immediately completed. accretive, that is, growing its loan book upon completion.
ISP Finance’s loan portfolio was valued at $ 689 million at the end of the June semester, reflecting nearly 13% year-over-year growth. The company had experienced 25% loan growth over the similar period in 2019, but its performance fell significantly but was still positive at 3.0% of loans in the 2020 period.
For the first half of 2021, ISP also increased its total assets by 13% to $ 784 million, which includes cash resources of $ 49 million.
The loan company, which operates out of Phoenix Avenue in Kingston, targets loans for household spending, education and health. Its half-year profit improved slightly to $ 32 million, while its interest income rose 15% to $ 204 million.