Innovative Energy Group Limited (IEGL) will approach its shareholders in January 2025 to request permission to issue new ordinary shares for the acquisition of Innovative Energy Company DBA IEC SPEI Limited.

According to its annual report, which was published yesterday on the Jamaica Stock Exchange (JSE), Innovative Energy Group (formerly Ciboney Group Limited) will be seeking to issue 850 million ordinary shares to acquire IEC SPEI Limited. The resolution also seeks permission from shareholders to list those new ordinary shares on the JSE and that the board be given authorisation to execute all the necessary steps to execute this process. The annual general meeting (AGM) to consider this resolution will be held on January 9.

Innovative Energy Group had disclosed in its 2024 audited financials, which was published on August 28, that it had entered into an agreement with the owners of IEC SPEI to purchase 100 per cent of the shares for US$17.75 million ($2.8 billion). That disclosure noted that Innovative Energy Group would now become a holding company with annual revenue exceeding $1.4 billion. This transaction is expected to be closed during the current quarter (October to December) as per the annual report. IEC SPEI Limited was incorporated on November 12, 2014.

At Innovative Energy Group’s virtual AGM in December 2023, the company noted that it would be going to market to raise capital via an additional public offering (APO), green bond market, and commercial and development banks to jump-start some of the renewable energy opportunities it wants to explore. This was on the premise of the company’s primary focus being on sustainable energy, engineering, construction, and real estate development.

According to IEC SPEI Limited’s 2023 annual returns, Nigel Davy owns 100 shares, Jennifer Davy owns 50 shares, and Innovative Energy Company Limited, a St Lucian international business company (IBC), owns nine shares. Nigel Davy is the chairman of Innovative Energy Group, which is the listed company. Nigel, Jennifer, and Kyle Davy are the beneficial owners of IEC Energy Company Limited, which owns 69.91 per cent of Innovative Energy Group, the listed entity. Innovative Energy Company Limited owns IEC Energy Company Limited.

The Davy’s already own 69.91 per cent of the shares, making it unclear if the company would be issuing all of the new shares to the market in a rights issue or APO. This is because there is effectively an 80 per cent limit as per JSE rules as to how much of a company a single beneficial shareholder can own.

It is yet to be ascertained if Innovative Energy Group will be issuing new shares to the public or other investors in a public equity offer due to this limitation from the JSE rules which would limit the Davy family from owning more than 80 per cent of the company. Innovative Energy Group can complete the acquisition and settle the transaction using debt and equity at a later stage. These considerations come into play since Innovative Energy Group is a company emerging from years of dormancy and has been reliant on related party funding from IEC SPEI Limited to jump-start its operations.

IEC SPEI Limited is a firm involved in engineering and energy with performance contracting, factory protection plan, and operations and maintenance listed as some of its services. It entered into three joint venture agreements with Wigton Windfarm Limited in April 2022 valued at more than $1.1 billion or US$7.33 million.

“IEG will be a distributor/seller of renewable energy products in Jamaica and the wider Caribbean, while IECL will continue its activities in renewable energy development, engineering, procurement, construction (EPC), and project management,” stated the annual report.

IEC SPEI Limited was not successful in the most recent request for proposal (RFP) to supply up to 100MW of renewable energy to the grid. The company had proposed one 10.20MW solar project in Mango Valley, St Mary, and another 12MW solar project in Spring Village, St Catherine. Wigton Windfarm Limited and SunTerra Energy Jamaica Limited were successful in being given the pre-awarded bid stage.

However, IEC SPEI Limited will have another opportunity to bid to supply renewable energy to Jamaica’s grid as the Government of Jamaica (GOJ) gets ready to ask for proposals for another 168MW bid in the 2024/2025 fiscal year (April 2024 to March 2025). This was announced by Governor General Sir Patrick Allen in his throne speech on February 15. These RFP proposals are managed by the Generation Procurement Entity (GPE).