Dear Editor,

I wish to congratulate the Government on its recent decision to divest the assets of Wigton Windfarm via the Jamaica Stock Exchange and the successful offer of shares, which was recently concluded.  Now that the euphoria of the IPO has subsided, I wish to highlight a number of issues which, in my opinion, have not been adequately addressed in the public discussions on the offer.  

The capital structure of the company, which promotes broad ownership without a controlling shareholder or significant share ownership by any one entity, poses serious risks to the future governance and financial viability of the company.  With 10,000 shareholders, it will be difficult to secure agreement on the strategic direction of the company, and to effectively hold the management accountable for the governance of the company. For example, will they be able to identify and select members for the Board of Directors to pursue their interests? Given this scenario, it is likely that the management will “run tings” given the expected weak oversight.

The company’s financial performance has been impressive so far. However, its operations are very capital intensive and its future expansion will require significant capital.  It is unlikely that the 10,000 shareholders can be relied upon to come up with the required capital and therefore, future expansion must be financed with debt, as internally generated funds from operations are likely to be insufficient.  Additionally, given that the proceeds from the IPO will go to the Ministry of Finance, there is no guarantee that the company itself will benefit from inflows, unlike previous public offerings.

Finally, the decision by government to create a Special Share, to be held by the Accountant General, appears to be redundant given that the company is being divested. The new owners should be allowed full control of the entity and government should withdraw entirely, so as to avoid any future risks to taxpayers due to its presence.

Despite the foregoing, I believe the initiative to privatise Wigton through the Jamaica Stock Exchange is a good one, and the focus on broadening of ownership is commendable. However, the long term governance and financial viability must be paramount in structuring future transactions, so that shareholders, as well as the country, can reap the benefits from divested entities.

 Sharon Weber