Mon | Jun 17, 2019

MPC Caribbean set for US$50m listing in two markets

Published:Wednesday | November 28, 2018 | 12:00 AMSteven Jackson/ Senior Business Reporter
Co-Managing Director of MPC, David Delaire (right), addresses an investor's briefing on MPC Caribbean's upcoming initial public offering in Jamaica and Trinidad at Jamaica Pegasus Hotel in New Kingston on Tuesday, November 27, 2018. Looking on from left are MPC Co-Managing Director Martin Vogt and Corporate Finance Manager at JN Fund Managers Luwanna Willimas.

MPC Caribbean Clean Energy Limited, a start-up investment company that invests in renewable projects across the region, aims to raise US$50 million from cross-listing in Jamaica and Trinidad and Tobago.

The brokers arranging the offer had to "dust off" the history books on how to do such a transaction, quipped deputy general manager of JN Fund Managers Jermaine Deans regarding the simultaneous IPOs.

JN Fund Managers is the lead broker for the transaction in Jamaica, and Republic Bank in Trinidad and Tobago.

The IPO subscription period runs from December 3 to 14 but may be extended.

The sponsor of the listing is MPC Capital, a listed German asset manager with a portfolio of over €5.2 billion across real asset sectors globally, including €320 million in renewable-energy assets. MPC Capital was founded in 1994 as a subsidiary of the international MPC Group, which dates back 170 years.

MPC Caribbean plans to issue 50 million shares at US$1 each. Some 40 million of the shares are targeted at institutional investors.

 

PLANS TO LIST

 

The company plans to list on the Jamaica Stock Exchange and the Trinidad and Tobago Stock Exchange, providing it raises at least US$5 million in each of those markets.

Co-managing director of MPC, David Delaire, said at an investor briefing on Tuesday that the company aims to hold investments in about 14 additional projects. Apart from its stake in the Paradise Park solar farm in Jamaica and its Tilawind windmill plant in Costa Rica, Delaire announced that it was recently shortlisted for a third project aimed at installing 50 megawatts of renewable power in an undisclosed country.

MPC Co-Managing Director Martin Vogt said at the briefing that investors can expect a 12.5 per cent return with an average cash yield of 9.4 per cent on the US-dollar instrument over the first five years of their investment.

In financial forecasts vetted by auditors Ernst & Young, MPC Caribbean is projected to earn revenues US$1.4 million and profit of US$1.3 million for the initial year of operation. Earnings are set to grow to US$7.3 million by the fourth year.

Earnings per share in the initial year are estimated at US$0.02, or about 50 times earnings. This figure is forecast to grow to roughly US$0.15 in the fourth year, which would put the US$1 listing price at about 6.6 times earnings.

Asked whether the returns quoted weren't better suited for large-scale institutional investors seeking dividends rather than individuals seeking rapid capital movement on the stock price, Vogt said succinctly: "It depends on the appetite on the risk for the average guy chopping coconuts. His interests can be equally aligned with that of pension funds.

"I do not think there is a difference between individuals and institutions in that respect. [It's] more about your risk-return appetite."

At the briefing, the company identified several potential investment projects in Jamaica, Trinidad, the Dominican Republic, Costa Rica, Colombia, and other markets that set are set to surpass US$200 million in investment.

Some core projects include the 50MW Eight Rivers Energy/Paradise Park solar plant under construction in Westmoreland and the 21MW Tilawind onshore wind farm in Costa Rica, operational since 2015. MPC has also identified prospects for a 60MW solar project in the Dominican Republic, a 50MW wind farm in Trinidad and Tobago, and a 5MW solar project in Guyana.

Vogt said the Caribbean has some of the highest energy prices due to fossil-fuel imports, which constrain the economy, but that the falling price of installing renewable generation units has made alternative energy investments viable.

business@gleanerjm.com