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Innovative Energy Group Limited, IEG, formerly known as Ciboney Group Limited, has acquired a related company for US$17.7 million ($2.8 billion).
The agreement with the owners of Innovative Energy Company DBA IEC SPEI Limited, IECL, to purchase 100 per cent of its shares was struck on August 26.
The financing of the transaction is still being finalised but will be a combination of debt and private equity, said IEG Director Wayne Wray.
“The deal is complete,” he said. “The parties have agreed to proceed with IECL being owned and controlled by the group company IEG.”
IECL is to be consolidated into IEG’s financials by the company’s second quarter, ending November.
On Thursday, the stock by rose nearly 15 per cent, as investors calculated the deal’s implications. Wray declined to give estimates as to the return on investment that could arise from the transaction.
As a result of the acquisition, IEG said in a market filing that it will become the holding company of a major renewable energy development, engineering, procurement, construction and project management operation.
IEG, which itself was acquired a year ago as a shell operation, earned less than $75 for the year ending May, and incurred losses of $11 million. IECL was said to have generated annual revenue of $1.4 billion; however, its profits were not disclosed. On its books, IEG is worth negative $21.5 million, while IECL holds an intrinsic value of $2.8 billion.
IECL is a private Jamaican energy consulting firm led by renewable energy consultant Nigel Davy. The company has developed, financed, constructed and operated over 20 energy projects in the United States, Central America and Jamaica, with a total capital cost of over US$800 million, Wray said.
In mid-2023, Government’s bailout agency Finsac announced the sale of its 72 per cent shareholdings in Ciboney Group to Wiltshire Consulting and Advisory Limited, which would use its subsidiary IEC Energy Company to hold the shares, it said.
On Thursday, Wray affirmed that IEC Energy Company was different from the entity just acquired by IEG.
“The independent directors of my board in IEG (finance, investment and technical committee) acted on behalf of the public company in negotiating the purchase,” Wray told the Financial Gleaner. “This was conducted to ensure the integrity of the transaction throughout,” he said.
As the new holding company, IEG will oversee all aspects of IECL’s operations, and chart its future projects in and outside the Caribbean.
Last December, shareholders voted to change Ciboney’s name to Innovative Energy Group, and that change was reflected on the market on March 28 of this year when IEG replaced Ciboney in the listings on the main index of the Jamaica Stock Exchange. IEG trades under the symbol ENERGY.
IEG shares closed up at $1.16 on Thursday, giving the company a market value of $633 million.
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