Energy start-up sees prospects in lease financing, launches IPO
Businessman Damian Lyn and Leo Williams, foundation shareholders in Caribbean Energy Financing Limited (CEFL), are preparing an initial public offering that will open on Monday with target raise of $452 million via the junior stock market.
Williams said Friday that with US$4.8 million in options on equipment waiting to be exercised, the company is likely to return to the market later with an offer of preference shares which are already broad approved, but not yet issued.
CEFL was originally incorporated in August 2007 as Caribbean Wind Energy Limited for the purpose of responding to a Government proposal for renewable energy generation, but has not been operational.
Now, the company will be entering the business of renewable energy lease financing as a start-up operation. It will underwrite industrial, commercial and large residential renewable energy projects and earns revenue from the leasing of installations.
CEFL's clients, whether businesses or individuals, will own the installations when the lease term ends in 10 years. The company also plans to earn from maintenance services, energy audits and co-generation.
"Renewables are very new in Jamaica," said Williams. "What we are looking to do is to bring a financing solution to the industry. We will finance any independent developer who is able to meet the criteria ... they have to have the ability to install, service and maintain before we look at financing them," he said.
OFFER TO PUBLIC
Some 38 per cent of the company is being offered to the public and four per cent to employees.
CEFL chose M/VL Stock-
brokers as arranger of the IPO. The offer includes 64,684,602 ordinary shares of which up to 23,325,345 are reserved. The IPO is priced at $7.30 per share but key partners and lead broker M/VL will pay $7 per share while board and staff members will pay $0.40.
According to the prospectus, issued on March 30, CEFL is targeting a regional market for renewable energy technologies, which is expected to reach US$85 million in 2015 and US$132 million in 2016.
While the company intends to begin operations in Jamaica, its business model is based on expansion into the region and penetration into harder currency markets.
Most clients, the prospectus outlines, will be using solar PV technology "as the installation times are generally more efficient, as compared to other technologies".
Over time, however, CEFL expects its portfolio to expand to a more diversified a mix of alternative energy technologies.
CEFL intends to invest the IPO proceeds in office space for the business, payment of start-up expenses inclusive of salaries for three executives initially, including the CEO, and the purchase of solar photovoltaic and other renewable energy generation equipment for onward leasing. It will also pay the expenses of the offer, around $11 million, from the proceeds.
CEFL's financials indicate that it currently has US$214,000 (J$24.6 million) in cash on hand, and option agreements with potential customers in relation to US$4.8 million (J$552 million) of lease projects which it intends to exercise following a successful Invitation and listing of the shares on the JSE Junior Exchange.
It promises an annual dividend on the ordinary shares of not less than 25 per cent of its net profits available for distribution, subject to the need for re-investment in the business.
Attorney at law Byron L. Ward is to be appointed CEO of CEFL if the offer is successful. Subscriptions close on May 4.
In their other business dealings, Damian Lyn is managing director of Alternative Power Sources Limited, while Williams is executive director
of investment advisory
firm Williams & Associates Investments Limited.