ISP Finance Services still has growth ambitions through acquisitions.
“You can expect good news from us in the first quarter. It’s just a matter of timing. We haven’t been able to complete some of the negotiations, but once they’re done, it will give a clear indication of where the business is heading,” said ISP CEO Dennis Smith to shareholders at the company’s annual general meeting on Thursday.
Last September, the microcredit company announced its intention to acquire parts of the loan portfolio of an entity it did not name. The transaction was expected to close by December 2021.
Smith did not specifically respond to questions from the Financial Gleaner about the planned deal, but his comments at the AGM raise the possibility that it is still in play but has been delayed.
ISP Finance’s search for the acquisition of one or more loan portfolios takes place in a context of restructuring of the microfinance sector. New regulations, due to be imposed by the Bank of Jamaica in August this year, have led to talk of takeovers and partnerships in the industry, as some microfinance companies may not be able to comply with strict new regulations in under the new Microcredit Act ready to sell or merge with stronger entities.
“We believe there will be great acquisition opportunities from the implementation of regulations governing the microfinance industry, and we are positioning ourselves to take advantage of them,” Smith said.
ISP Finance, which operates from Phoenix Avenue in Kingston, offers loans primarily for household expenses, education and health expenses. Its target market is largely made up of public sector workers.
So far, ISP Finance has only announced that a loan portfolio acquisition agreement reached in 2020 gives it the right to buy some existing loans from what its management has described as a medium-sized loan portfolio.
For the quarter ending September 2021, ISP Finance recorded a profit of $21 million on interest income, its main source of revenue, totaling $114 million. Interest on loans earned by the company rose 32% year-on-year.
ISP Finance’s loan portfolio was valued at $698 million through September 2021, reflecting nearly 12% year-on-year growth. The company currently holds cash of $51 million.