Ciboney transitioning to energy market under new owner
Fresh from the yes votes at its recent annual general meeting, Ciboney Group is undergoing a transformation that will see the shell of what was once a resort business being repositioned and renamed Innovative Energy Group Limited or IEG as it transitions to a new sector: energy.
The renaming follows the takeover of Ciboney by the Wiltshire Group and is a prelude to tapping the financial market for at least US$20 million in the first instance to execute capital-intensive energy-sector projects.
“The name change is to reflect what we’re all about, that is to say, innovation and energy, hence Innovative Energy Group,” Executive Chairman and CEO Nigel Davy remarked in an interview with the Financial Gleaner. “We want to immediately telegraph that to anyone who chooses to interact with us,” he said.
It is still to be determined whether the new Innovative Energy Group will eventually take over the assets of connected company Innovative Energy Company DBA IEC SPEI Limited, referred to as IEC, or whether IEC would become a subsidiary of the new IEG. Both IEC and Ciboney are controlled by IEC Energy Company Limited.
Ciboney shareholders also approved the maximum number of shares that the company is authorised to issue from 546 million ordinary shares to an unlimited number.
Davy says this will allow for a range of fundraising options, including an additional public offering of shares, a rights issue, private placement, or other mechanisms.
“We’re looking at a variety of options. Whatever it’s going to be, we want some latitude in that regard. We’re not saying exactly what it’s going to be. Based on the appropriate advice, we’ll make those decisions later,” Davy said.
Still, he indicated that given the size of the funds being sought, they were unlikely to do a rights issue.
“The kind of capital that we intend to raise, we don’t believe that we can do it in a rights issue because the energy business is very capital intensive,” Davy said.
The company is positioning to bid on the Jamaican Government’s new 100MW project for new renewable energy capacity.
“That project alone could be about US$40 million if we’re successful,” Davy said.
In the short run, IEG is looking to garner US$20 million or just over $3.14 billion in local currency. Over the medium to long term, according to Davy, the company will be tapping the market for another US$40 million to US$50 million to satisfy project needs.
“We’re actively negotiating a number of transactions, and the numbers I’m speaking of are in the ballpark of what we need,” Davy said.
Davy says IEC itself always had the intention to do an initial public offering but changed tactics after the opportunity to acquire a listed company presented itself.
The strategic acquisition of Ciboney was an opportunity to take IEC public.
So far, IEC has featured in several solar PV projects whether acting alone or as joint venture partner with Wigton Windfarm Limited. They included Norman Manley International Airport project valued at US$2.9 million to install 2.6MW of solar PV power production; a solo project at Sangster International Airport for the installation of a 2.2MW solar plant costing US$2.2 million; and a new project at Sangster costing US$7.78 million, a joint venture for a 5.7MW solar installation using both rooftop and floating arrays.
An important aspect of the latter project, which will run for 10 months, is the provision of four megawatts of storage using lithium-ion batteries provided by tech giant Huawei.
Davy says the cost of the batteries has fallen from levels that were once considered prohibitive. The new quotations, which he declined to disclose, is now at levels that will significantly cut the payback period, that is, the time it takes for the investment to pay for itself through normal use, he said. Project payback periods of three to five years are considered ideal.
Still in the installation stage is the US$7.4 million JV to convert National Irrigation Commission’s pumping stations to run on solar power.
“The NIC project is the first large-scale utility project with battery energy storage in Jamaica. It is very significant for us, for NIC, and for Huawei,” Davy said, adding that the Chinese tech company has been going all out to supply cutting-edge technology for solar panels, inverters, and now, battery energy storage to feed into other projects in the Caribbean and Latin America.
Efforts to speak with local representatives of Huawei were unsuccessful.
Davy says neither the batteries nor the solar panels installed under the NIC project can be used in a domestic setting. The batteries carry a very high voltage, and the panels themselves generate high voltages at high current, which would damage domestic appliances and machinery. This is the latest answer to the perennial problem of equipment theft, Davy opined.
As for the emergent IEG, he describes the company as a group of ‘activist investors on a mission to transform the alternative power landscape, not in a disruptive way but, rather to go beyond investment to manage and run energy assets.
“We really want to make a major difference, not only in Jamaica, but in the rest of the Caribbean. We’ll be very aggressive because we have the skills et to execute on some of the projects,” Davy said.