Following its 2.5-year stint in Guyana, Dolla Financial Services Limited will be winding up operations there as it looks to reallocate resources to Jamaica and walk away from the geopolitical instability caused by Venezuela’s claim on the Essequibo region of Guyana.
The revelation on Dolla Guyana Inc came out in the company’s 2023 audited financials which were released on Tuesday on the Jamaica Stock Exchange (JSE). The note stated, “The decision is due to the current geopolitical uncertainty and the reallocation of resources to Jamaica where returns exceed those in Guyana.”
Dolla Guyana was formed in August 2021 with Dolla Financial Services injecting $31.18 million to form the business, and was funded by a US$1-million loan. Dolla Guyana brought in $8.41 million in interest income and had an asset base of $163.08 million by the end of 2021. Dolla Guyana’s 2022 performance saw it bring in $84.29 million in interest income and net profit of $27.92 million with an asset base of $230.11 million. This business all came from one branch in Georgetown, Guyana.
With a smaller asset base of $197.96 million at the end of 2023, Dolla Guyana generated $86.96 million in interest income and had net profit of $5.11 million due to larger intragroup expenses. The phased wind-up of Guyana should be completed by March 2025 when all loans are fully repaid. This decision was decided on February 5 by Dolla’s board of directors.
“It’s a strategic move by us. We have been in Guyana for a little while and it’s a profitable entity, but in light of the recent geopolitical climate, I think has created some amount of uncertainty within Guyana itself. We have weighed the financial risk, we have looked at the market and how volatile it is, compounded by other economic uncertainties. We also looked at the fact that we could probably manage the risk a little more prudently by reallocating some of the resources to Jamaica which is of course a more desirable market at the moment,” stated Dolla Financial Chief Executive Officer Kenroy Kerr in a call with the Jamaica Observer on Tuesday.
Venezuela has made moves to lay claim to the Essequibo region of Guyana, which makes up two-thirds of the country in recent months, following their own elections. However, the move has been seen negatively by the international community considering that the dispute has been settled since 1899 when British Guiana received 94 per cent of the territory. A bilateral meeting was held in Saint Vincent and the Grenadines on December 14 under the auspices of Prime Minister Ralph Gonsalves.
While that discussion sought to get a peaceful solution, the move by Venezuela has also caused jitters for other listed companies who have reported a negative financial impact by the situation. Guyana is currently the fastest-growing economy in the Caribbean and South America, thanks to its oil deposits that are being extracted by the ExxonMobil Corporation.
“However, inventory build-up from importers’ increased finance costs in Colombia; and uncertainty about Venezuela’s claim to a major portion of Guyana, and unavailability of higher purchase credit for new cars led to declining sales for industrial equipment and vehicles in Guyana in Q1 2024,” stated Massy’s Q1 report to shareholders.
Massy’s Guyana segment reported a six per cent increase in revenue to TT$481.28 million (J$10.96 billion) during Q1 with profit before tax rising three per cent to TT$77.42 million (J$1.76 billion).
Supreme Ventures Limited (SVL) has had a presence in Guyana since February 2019 which was its first move outside of Jamaica, but does not report the country as a standalone segment. SVL brought horseracing betting for its Cayman track operation and sport-themed gaming under the iBet shops. SVL had spent a little under $100 million for its Guyanese entry, which included the Satro building on Croal Street in Georgetown.
SVL’s financials reveal that a St Lucian International Business Company (IBC) Supreme Guyana Incorporated as the direct parent of Supreme Ventures Guyana Holdings Incorporated (SVGH), a Guyanese holding company which owns Supreme Ventures Enterprise Inc, the business which directly operates in Guyana. Supreme Group Incorporated, another St Lucian IBC, is the direct parent of Supreme Guyana and had received $788 million in investment from its direct parent SVL. SVGH owes SVL $40.50 million as per its 2023 audited financials which were released on Tuesday.
FosRich Limited has also begun to build out partnerships in Guyana with NCB Capital Markets Limited beginning operations in Guyana within the last two years. All of these prospects might be dashed if the situation becomes more embroiled by Venezuela.
Although Kerr didn’t express any positive sentiment regarding the situation, he did note that the company would explore other regional opportunities where they present themselves while focusing on growing its Jamaican prospects. The company submitted a request to the Bank of Jamaica (BOJ) recently for the consideration to open a new branch. Dolla’s standalone operations grew interest income by 28 per cent to $818.55 million in 2023 with net profit rising by 22 per cent to $297.51 million. Its Ultra Financier subsidiary generated $316.40 million in interest income and had net profit of $116.51 million in its first full year of operations.
Dolla’s consolidated total assets closed 2023 at $2.99 billion with a loan portfolio of $2.45 billion. Its total liabilities and shareholders’ equity were $2.01 billion and $981.38 million, respectively.
Dolla added Alison Lynn as an independent director on February 29 following her fit and proper approval by the BOJ. She subsequently joined the audit, remuneration and compliance and risk management committees on the same day. As a result, each committee is now comprised of three independent directors. Walter Scott, who resigned as chairman of McKayla Financial Services Limited, a Supreme Ventures Limited subsidiary, on November 30 and who was invited to the Dolla board, has yet to be appointed. Xesus Johnston and Andrea Whittaker were invited to Dolla’s board last July, but their appointment is subject to BOJ approval. Dolla’s board now consists of six directors.
Dolla’s stock price closed Tuesday at $2.67 which leaves it down 1.48 per cent in 2024 with a market capitalisation of $6.68 billion. Dolla shareholders, on record as of March 22, are set to receive a $0.04 dividend on Friday.(Observer)