Bahamas Striping Group of Companies (BSGC) announced today [Tues., Sept. 20, 2022] its subsidiary, Caribbean Pavement Solutions has signed an agreement with the Jamaica-based, Sygnus Credit Investments Limited (SCI), to fund up to US$25 million of the $60 million road improvement project slated for Exuma. The private credit investment company, SCI is managed by the Sygnus Group (Sygnus), a leading alternative investment manager in the Caribbean.
“This 45-mile highway improvement and infrastructural project will not only modernize the island’s main thoroughfares but also address safety issues and enhance the local economy,” said BSGC’s executive chairman Dominic Sturrup.
The scope of work encompasses verge cleaning, street signage, guard rail installations and sidewalks. The project is expected to drive the island forward with updates to sea walls and the installation of new drainage wells to reduce flooding and water settling on the roadway, allowing the infrastructure to have a longer service life. The project is slated for completion in 2024.
“Due to the project’s size and complexity, Caribbean Pavement Solutions has allocated $10 million for subcontracted work,” Sturrup revealed. “We estimate all contracts should be issued over the next 12 months.”
This is not Sygnus first foray into the local market. The firm served as lead arranger of a private-public partnership (PPP) between the Bahamian government and PPP Investment and Construction Company Limited (PPPICCL) to raise US$9 million earlier this year to rebuild the Eight Mile Rock West End government complex.
According to President and CEO of Sygnus, Berisford Grey, the alternative investment firm not only evaluated Caribbean Pavement Solutions’ ability to pay its debts, it also assessed the company’s corporate values.
“The key thing for us, starts with the company and the individuals. We invest, provide credit to individuals and corporations that are run by very strong businesspeople, with strong governance and a strong reputation. Caribbean Pavement Solutions and its team fit this profile perfectly,” he said.
Like every other lender, Sygnus looked at collateral and the capacity of the company to actually execute projects, their business strategy and support.
“We want to do business with companies that think about the relationship with us as a long-term partnership. That allows us to sit together and find customized solutions. This is exactly the type of partnership we have built with Caribbean Pavement Solutions.” The Exuma road improvement project marks the first time BSGC has sought outside capital to complete a major public sector project.
“What drove us to explore this funding mechanism is approaching government time and again and hearing they wanted to give us the work but there was no money in the budget for it,” explained Sturrup.
The PPP framework transfers risks, as well as rewards, to private sector partners who choose to collaborate with the government to design, finance and build crucial public infrastructure with private capital as opposed to funds from the public purse.
“We had to figure out how to keep the company alive, keep the company growing and keep our staff. We researched what different companies did around the world in a similar situation. We saw that PPP was the perfect solution for our company and our country,” Sturrup said. In a constrained economy, PPPs provide a means of funding crucial infrastructural projects when government funds are limited. It can pay for work, with a modest interest rate attached, over a period of time.
For its part, the private partner must deliver the project on time, within budget and adhere to a predetermined scope of works in order to see a return on investments. Sturrup said Bahamas Striping Group of Companies – through its road construction arm, Caribbean Pavement Solutions – sought funding from local, regional and international financial institutions for this latest project. After reviewing proposals from China, the United States and other Caribbean nations, BSGC selected Sygnus.
Sygnus displayed “an appetite for investments,” BSGC’s managing director, Allen Albury noted. “Sygnus, recognizing the strength of the group and opportunity to provide flexible financing to assist with liquidity and cash flow, was pleased to play a part in helping the company to continue to grow and provide jobs, which will have a positive impact on people and the wider economy. ”
For this first round of funding Bahamas Striping found Sygnus to be a perfect match. It had the capital, was flexible, knew about the group of companies, which sped up the due diligence process, and “brought enthusiasm to the deal,” company officials said.
“We wanted a lender who saw our company and the project we are undertaking as a direct benefit to the country and its citizens and believed they could get a return on their investment. Generally speaking, we were looking for a healthy financial relationship across the board, a win for them and for us,” said Sturrup.
Bahamas Striping Group of Companies said its “eager” to expand the footprint Caribbean Pavement Solutions created in Exuma when it secured an $8 million government contract to construct 10 miles of roads back in 2020. For that undertaking, CPS invested in a new $1 million mobile asphalt manufacturing plant still stationed on that Family Island.
“We knew we were going into Exuma with a long-term vision. We knew that 10 miles of road was just a drop in the bucket for the number of roads and capital works that must be done,” said Albury. “We believed additional work or expansion of the work would be an automatic outcome. As we projected, that’s what happened.”
Company officials said they intend to return to the capital markets in short order to secure additional funding for the Exuma road initiative and other approved projects.
Writer: Tosheena Robinson BSc, MSc