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Wigton IPO gives energy sector new wind

BY DENNISE WILLIAMS
Observer writer

Thursday, April 26, 2018

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The upcoming Wigton Windfarm (WWF) initial public offer (IPO) on the Jamaica Stock Exchange (JSE) will be the second energy-related company on the market. It will join the very illiquid Jamaica Public Service Company (JPS) stock that pays out USD dividends quarterly to its shareholders, who — based on JSE record — seem disinclined to trade the stock.

WWF, a wholly owned subsidiary of the Petroleum Corporation of Jamaica (PCJ), is the largest wind-energy facility in the English-speaking Caribbean and was built by the Government to diversify Jamaica's energy mix.

Wigton accounts for 6.2 per cent of the grid's installed generating capacity and 3.7 per cent of Jamaica's electricity generation. As a modern, successful green business, WWF is also poised for investment, generating an income of $2.16 billion, net profit of $186 million, and total comprehensive income of $214.8 million as of 31 March 2017.

With the listing on the stock exchange, Jamaicans from all walks of life will be able to purchase shares in the company. “We want to widen the base of ownership and direct equity participation in the economy by encouraging the public to become involved in the energy sector,” says Development Bank Jamaica's (DBJ) Managing Director Milverton Reynolds.

The DBJ is steering the privatisation of WWF through its Privatisation and Public-Private Partnerships (P4) Programme and, on behalf of PCJ, engaged Mayberry Investments Limited to provide financial advisory and stockbrokerage services; Patterson Mair Hamilton to provide Legal Services; and Ernst & Young to provide valuation services for the transaction.

Given that Jamaica is faced with high fiscal debt and a strapped local budget, the DBJ encourages private sector participation in the economy by providing investment opportunities through its P4 programmes.

“In this way,” says Denise Arana, DBJ's general manager for P4, “the funds released from the sale of — and other forms of private sector investments in publicly owned assets are re-allocated to fund critical core governmental activities in areas such as health, roads and infrastructure maintenance.”

Reynolds says local ownership is a strong driving force of public-private partnerships and privatisations, with Jamaicans accessing roughly 75 per cent of Government of Jamaica investment opportunities put on the market through the DBJ.

Since 2009, privatisation and PPP transactions have brought US$1.6 billion in actual revenue sales and projected investments into the economy. Such transactions include the modernisation and development of world-class infrastructure, like the Kingston Container Terminal which facilitates operational efficiency improvements and private sector investments in modernisation, and development like Mavis Bank Coffee Factory and the Jamaica Pegasus hotel.

While capital investment plays a vital role in these transactions, the private sector also offers expertise, cost-saving and efficiency ideas, and the ability to assume many of the risks throughout an infrastructure projects development life cycle.

By leveraging the private sector as a partner, the Government of Jamaica has increased its capacity to focus on the country's social, education, health and infrastructure needs. The privatisation of Wigton Windfarm Limited via listing on the JSE plays an important part in that effort.

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