Tropical Battery prices September IPO at one dollar
Energy storage company Tropical Battery is seeking $325 million of equity from the market in an initial public offering of shares priced at $1 per unit.
The transaction as structured would reduce the Melville family stake in the 70-year-old company, held through Dai Diverze Jamaica Limited, from 100 per cent to 75 per cent.
The offer opens to the market on September 22 and closes September 30.
The past year has seen a $60-million investment in Tropical Battery Company’s build-out of a new headquarters and a restructuring of its offices on Ashenheim Road in Kingston.
But Tropical Battery, which trades in automotive products, has other growth plans that the IPO proceeds are meant to fund. They include the addition of start-stop technology to its line of products, expansion and renovation of the Tropical Battery retail stores; expansion of parking space at its Grove Road, Kingston retail store, which has high traffic volumes; and finishing touches on the headquarters at Ferry, Kingston.
Tropical Battery also plans to invest in information technology, and expansion of its mobile/home-delivery fleet.
The company said it has been weighing expansion since 2014.
“The team considered a number of options, but ultimately arrived at the sale of equity in its parent company (Diverze Assets Inc) to assist Tropical Battery in increasing its working capital and to dedicate shareholder expertise and skills to the business on a full-time basis,” the prospectus read.
Tropical Battery was acquired by John Melville in 1967 from American businessman Tex Williams. The business is currently operated by brothers Marc Melville as chairman, Alexander Melville as managing director, and Daniel Melville Jr as vice-president for sales and marketing, who are also directors of the board. Other directors include CFA charter holder Ricardo Hutchinson; chartered accountant Caryl Fenton, and attorney-at-law Marc Ramsay.
The three Melvilles are also directors of Dai Diverze, which is the parent company to Tropical Battery, as well as Chukka Caribbean Adventure Tours and real estate business Diverze Properties Limited.
Tropical Battery had a bad year in 2014, recording losses of $82 million, but the following four periods delivered solid results. For year ending September 2019, pre-tax profit amounted to $87 million, and the company wrapped the year with cash flow of $155 million.
Tropical Battery Company limited currently has nearly 1.14 billion shares in issue, post IPO, its issued capital will increase to 1.3 billion units, three quarters of which will be held by Dai Diverze.
The IPO is being brokered by NCB Capital Markets Limited.