Proven Investments Limited (PIL), in its annual report released on August 25, 2020, states that the global coronavirus (COVID-19) pandemic is “set to push the Latin America and Caribbean region into its deepest recession in modern history”.
As such, the company is recommending that governments in the region introduce stimulus programmes that will offset this looming crisis.
In the report, PIL gives as background data the low growth experienced in 2019, which has further worsened due to COVID-19 conditions.
According to the International Monetary Fund, growth stagnated in Latin America and the Caribbean at 0.1 per cent in 2019 and will reverse by 5.2 per cent in 2020.
Prior to COVID-19, growth was constrained by high levels of indebtedness, low investment, weak business climates, low productivity, among other factors.
“These factors are expected to exacerbate effects of the pandemic coupled with limited fiscal space to roll out extensive stimulus programs to speed up the rate of recovery, ” PIL stated.
“Monetary policy as a tool is limited in the region due to the trend in expansion, which was already in place prior to the pandemic and which resulted in persistently low policy rates.
The company also said that downside risks facing the region include the inability to provide an uninterrupted supply of health services and essentials coupled with lack of social protection systems to provide support to the vulnerable.
“Thus, looking forward to a more robust fiscal stimulus plan across the region is the key to ensuring a smoother and swifter recovery from this pandemic,” PIL stated.
PILs annual report said Net Profit Attributable to Owners of the company (NPAO) for the year amounted to US$29.98 million, while NPAO adjusted for the extraordinary gain and associated charges amounted to US$11.04 million, which represents a 61.26 per cent increase in core earnings from the US$6.85 million earned in the previous year.
PIL operates under three distinct business strategies: Private Equity (Financial Services and Real Sector), Real Estate, and Treasury/PIL Proprietary.
In updating its COVID-19 response, the company said it has been “very proactive in providing leadership and governance structures to support our portfolio companies as well institute frameworks to ensure the protection and safety of our stakeholders as the pandemic evolves”.
All portfolio companies, PIL outlined, were able to activate business continuity plans and execute on transitions in their respective operations to safeguard the health of their stakeholders.
Another major highlight of PIL’s COVID-19 response was its increased and enhanced monitoring and reporting. The company says it has enhanced liquidity monitoring and management through activation of liquidity plans to ensure that all portfolio companies maintain sufficient liquidity above the minimum regulatory requirements. This is to support clients as well as position itself to take advantage of portfolio opportunities.
PIL indicates it is also monitoring the credit risk exposure of its investment portfolio and, “where possible, proactively rebalance to reduce credit risk exposure to align with our top-down assessment of the short- to medium-term impact of COVID-19”.
With the company’s steady focus on strategic initiatives, despite the disruption, PIL has developed COVID-19 scenario forecasts under varying paths of the pandemic.
This, it noted, has been instrumental “in enabling a nimble yet disciplined approach to the budget revisions to support the ongoing focus on maximising the risk-adjusted return to shareholders”.