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Tropical Battery IPO to open September 22

Tropical Battery Company Limited will hope to raise up to JM$325 million when it opens its initial public offer next week

Priced at one dollar per share, the offer will open September 22, 2020 and close on September 30, 2020. The broker is NCB Capital Markets Limited.

If all shares are subscribed, the company aims to raise JM$325 million, some of which will go to selling shareholders and the remainder to funding company expansion.

If the offer is successful, the owners of Tropical battery would have sold 25 per cent of shareholding, with 75 per cent retained by Dai Diverze (Jamaica) Limited.

All of the issued shares in Tropical Battery Company Limited are held by Dai Diverze, a company incorporated under the laws of Jamaica.
All of the issued shares in Dai Diverze (Jamaica) Limited are held by Diverze Assets Inc., a company incorporated under the laws of St Lucia). The shareholders of Diverze Assets Inc. are Portland Private Equity (holding 40 per cent of the issued capital of Diverze Assets Inc.) and Mark Melville, Alexander Melville and Daniel Melville (collectively holding 60 per cent of the issued capital of Diverze Assets Inc.).

Of the shares on offer, 162,500,000 are available for purchase from the selling shareholders for whom the Company acts as agent in the invitation.

Up to 137,500,000 shares will be made available for purchase by the general public, while up to 187,500,000 shares have been initially reserved for subscription by company applicants, industry partners and strategic investors.

Included in the reserve pool offer are employees, industry partners, the Tropical Battery Pension Fund, and NCB Capital Markets Limited.

Tropical Battery has primarily operated in the energy storage space for more than 70 years through the sale and distribution of batteries.

The company made revenue of JM$1.74 billion in 2019 compared to JM$1.47 billion the year before. Profit in 2019 was $62.9 million compared to $30.98 million in 2018.

Managing Director Alexander Melville said in his letter to investors, which is included in the prospectus, “We believe that the Invitation presents an exciting new investment opportunity that allows investors to own a piece of one of Jamaica’s oldest and most trusted household Brands.”

If the company is admitted to listing on the Junior Market of the Jamaica Stock Exchange, it will take advantage of the special concessionary tax regime that is currently in place.

So 100 per cent of profits will be exempted from taxation for the initial five year period. For the remaining five-year period, 50 per cent of profits are exempted from taxation

Proceeds of sale of the shares being sold by the selling shareholders ($162.5 million) should got to the selling shareholders and not to the company.

Tropical intends to use the balance of the proceeds of J$162.5 million for expansion and working capital purposes including new product lines; expansion and renovation of retail stores; expansion of parking; completion of build out of and relocating to the company’s new warehouse, head office and retail store at Ferry; and to acquire and install information technology systems  for greater efficiency .