September 25, 2020

Tropical Battery Limited plans to deploy some of the funds raised from its Initial Public Offer (IPO) to tap into other Caribbean markets.

Managing Director, Alexander Mellville, says the company will expand either through acquisitions or startup subsidiaries. The family inked success with the growth of its separate attractions venture, Chukka Caribbean, which now operates across four territories in the region.

Tropical Battery’s Initial Public Offer of ordinary shares closed at 4:30pm on Tuesday (September 22, 2020), six and a half hours after opening due to heavy demand which led to its oversubscription. The invitation was originally scheduled to close on September 30.

This means the company successfully raised the J$325 million (US$2.3 million) targeted with shares priced at J$1.00 (US$0.007) each.

Melville said half of the proceeds has been earmarked for growing the business with the other half going to shareholders.

In addition to eyeing other Caribbean outlets, he said the company will also continue the expansion of its retail stores to “modernize them and make them a little more customer friendly”.

 The Managing Director added that Tropical Battery will also be offering new products and focus more on clean energy storage.

“We’ve gone into lithium-ion batteries for renewable energy, we’ve been buying and selling those for a year now and they’ve been doing really well for us,” said Melville.

Lithium-ion batteries are used in electric vehicles, one of the fastest growth areas in the car industry.  For instance, the research arm of Bloomberg projected in its 2020 outlook that electric vehicles (EVs) will hit around 10% of global vehicle sales in 2025. Jamaica is also preparing for EVs on a large scale, with plans by the power utility and at least one other provider to build an island-wide network of charging stations starting this year. Melville said persons will need Tropical Battery, “now more than ever”.

Melville added that the rapid change in the vehicle industry will help to grow the business as all electric vehicles come with two batteries—a large one to run the motor and the conventional battery which powers radios and lights.

He said that one of their suppliers actually supplies Tesla with batteries. “So we think this market has a bright future”.

Tropical Battery virtually doubled its profit before tax to $87 million (US$620,000) in the 2019 full year financial results from $45 million (US$333,000) a year earlier. Its latest quarterly results, however, are slightly lower year on year due to the impact of the COVID-19 pandemic, with profit before tax of $62 million in the June 2020 third-quarter compared to $67.6 million a year earlier.

All staff were subjected to a pay cut earlier in the year. Top management figures were scaled back 10%, middle management 5% and frontline workers, 2%, but despite “rough months” in terms of profit, Melville said sales are tracking above last year’s figures.

Plans for Tropical Battery’s IPO were in train for some two years.

Manager of Wealth Management and Syndication at NCB Capital Markets, Sancia Thompson McDonald said she hopes the IPO will “re-energize” the Junior Market of the Jamaica Stock Exchange where the company aims to trade within a month.

NCB Capital Markets acted as the lead broker to the offer. McDonald said NCB Cap will announce the basis of allotment shortly. Just about 10% of the total 1.3 billion shares or 137.5 million shares were offered to the general public, while 187 million shares were reserved for select categories including Directors, employees, industry partners and other key stakeholders.