Sunday 20 September, 2020

Tropical Battery seeks to raise $325 million from IPO

Topical Battery Company Limited intends to use part proceeds from its upcoming IPO to upgrade its headquarters at Ferry and pursue other measures to improve its business.

The company has issued the prospectus for an offer of up to 325 million ordinary shares in the company.

Priced at $1 per share, the offer will open on September 22 and close on September 30. The broker is NCB Capital Markets Limited.

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

Tropical intends to use the balance of the proceeds of $162.5 million for expansion and working capital purposes. The company aims to offer new product lines; expand and renovate retail stores; expand parking; relocate to the new warehouse, head office and retail store at Ferry as well as acquire and install information technology systems for greater efficiency.

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.

The 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 are Portland Private Equity (holding 40 per cent of the issued capital of Diverze Assets Inc.), 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 an agent in the invitation.

A total of 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 Tropical Battery 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 revenues of $1.74 billion in 2019 compared to $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, it will take advantage of the special concessionary tax regime that is currently in place.


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