Only a few months after announcing that it was looking for companies to complement its microfinance operation, ISP Finance Services announced that it had reached an agreement to acquire a portfolio of loans.
The agreement is subject to closing conditions which will determine the overall size of the acquisition. Management expects the close to take place before the end of the year and that the transaction will pay off immediately for the growth of the loan portfolio.
ISP Finance typically lends to people seeking financial assistance for household expenses, education, and health.
Many players in the microfinance sector have been affected by the COVID-19 pandemic. Some have also had to adjust their activities following the passage of the Microcredit Act, which for the first time gives the Bank of Jamaica control over lenders.
The fallout in the industry has led to the Jamaica Micro Financing Association (JamFA) and the Jamaica Association for Micro Financing (JamFin) – associations that speak on behalf of payday lenders, reinforcing their message that some members – especially smaller players may have to merge to survive.
Others are looking for growth opportunities.
Despite the commercial fallout, ISP Finance recorded a slight improvement in net income to $ 32 million for the six-month period ending June 2021. The growth is attributable to a 15% increase in interest income to $ 204 billion .
In its statement posted on the JSE earlier this week, ISP Finance said the loan purchase agreement gives the company the right to select existing loans from a medium-sized loan portfolio.
ISP Finance was listed on the Jamaica Stock Exchange five years ago. The company has grown its business mainly through new product offerings and the increase of its branch network across the island.