Although capital investments have traditionally been solely focused on financial securities and real assets within the commercial and residential space, a new opportunity has opened as more companies and funds zero in on infrastructure as an investment proposition to generate risk adjusted returns for investors while simultaneously developing the nation.

The latest infrastructure investment came last week when it was announced that Sagicor Group Jamaica Limited’s (SJ) had signed a US$285-million ($42.75-billion) deal where it will directly invest US$100 million ($15 billion) and source another US $185 million ($27.75 billion) from investors to purchase and lease the 150-MW (megawatt) dual-fire combined heat and power facility in Halse Hall, Clarendon.

This will result in New Fortress Energy’s (NFE) Jamaican subsidiary, which currently owns the plant, raising a substantial amount of capital while providing SJ and investors a chance to own an asset which provides a crucial function to Jamaica’s energy needs. NFE South Power Jamaica Holding would lease the asset from SJ and the other investors which would produce an income stream for the new owners of the plant. The deal is subject to regulatory approval and customary closing conditions.

“The fact that other participants are coming in and seeing the need for funding infrastructure is a good thing. The only way we can develop as a nation is if our infrastructure is also developed. That would cause the growth such as with roadworks which opens communities and possibilities for farming plus other activities along those corridors. In the energy sector, there is the need for us to retire old generating capacity that uses heavy fuel oil which is very dangerous to the environment. It’s a big win for Jamaica on a whole!” said vice-president of Investment Banking at NCB Capital Markets Limited (NCBCM), Herbert Hall, in an interview with the Business Observer.

NCBCM lead another major infrastructure transaction to date in the form of TransJamaica Highway Limited (TJH) which became publicly listed in March 2020. The TransJamaica project was a culmination of five transactions totalled US $557.6 million ($83.88 billion) which saw TJH being acquired by the National Road Operating and Construction Company (NROCC) before being issued to the Jamaican public in an initial public offering. This also involved bridge loans, a US$225-million international bond and a preference share sale valued at US$27 million. The international bond offer was awarded Infrastructure Financing of the Year award by Latin Finance last October.

“Infrastructure generally in Jamaica has been an issue. Governments would usually run high deficits which left less money to focus on increasing the capital/infrastructure stock. Over time, there would have been a gap in terms of what we need versus where we are. This isn’t endemic to Jamaica but is a worldwide problem. Over the last couple years, we would have seen greater focus on infrastructure. You can see what’s happening along the Highway 2000 corridor. If that wasn’t there, then clearly, the housing and other activities which followed wouldn’t exist,” stated Hall on the effects infrastructure has on the development of a country and its environs.

NCBCM had organised a US $180 million bond offer for NFE in September for the completion of the Clarendon plant. NCBCM also lead the creation of Stratus Alternative Funds SCC (Segregated Cellular Fund) which has created an infrastructure fund to provide investors across the region an opportunity to gain exposure to the space and see solid returns on their investment.

Hall noted that NCBCM has specialised itself in the area of wastewater financing as well as leading the funding of entities like NWC (National Water Commission) in debt raises without government guarantees.

Several business process outsourcing (BPO) sector developers have also welcomed the development of the Montego Bay Bypass (MBB) which is expected to assist with the ability for it to source more agents. The MBB project is the first fully Jamaican funded project which will not require external investments such as from a foreign entity. It is valued at US $220 million ($33 billion) with $1.2 billion allocated for its development in the current fiscal year. One BPO in Barnett Park is currently operating at 30 per cent capacity due to the distance factor limiting the recruitment of talent.

The Jamaican Government has allocated $31.1 billion in its 2021/2022 fiscal year budget to an infrastructure programme which is expected to accelerate the recovery of the country from the novel coronavirus pandemic. Also, $17.7 billion has been allocated to the Southern Costal Highway Improvement Project with another $8 billion allocated to a special public investment infrastructure programme related mainly to water and sewage infrastructure.

The Ministry of Health has also allocated US $205.7 million to $236.2 million ($27.2 – $31.2 billion) on the build out of the country’s health infrastructure over the next five years. This includes facilities like the Spanish Town and Cornwall Regional Hospitals along with places like Chapleton, May Pen and St Ann’s Bay.