WIP Energy Limited, the spin-out domestic petroleum subsidiary of West Indies Petroleum, is seeking to raise as much as US$80 million ($12.8 billion) by way of an initial public offering (IPO). The funds being sought would make WIP Energy the second-largest public offer of shares in Jamaica only after TransJamaican Highway which raised $14.1 billion in its 2020 IPO.

The company is already courting investors, according to people familiar with the process, who requested anonymity to speak about the happenings because they were not authorised to do so publicly.

“WIP Energy is gearing up for an IPO on the Jamaica Stock Exchange’s main market, with a focus on securing anchor investors to purchase at least a three per cent stake, valued at approximately US$2.4 million,” the people told Jamaica Observer.

Anchor investors are typically institutional investors, such as pension funds, mutual funds, or private equity firms, that commit to investing a significant amount of money in an IPO, and help provide stability and credibility to the IPO, as well as generate interest and demand from other investors.

As for the WIP Energy IPO, the people said the company aims to sell a total of 8 billion shares at a price of US$0.01 ($1.60) per share for the target raise of US$80 million. The shares on offer represents 32 per cent of the company, giving it an overall valuation of US$250 million. The anchor investors who are being courted are expected to take a minimum of 240 million shares.

However, it’s worth noting that only a portion of the proceeds will go directly to WIP Energy. Specifically, US$11.5 million will be allocated to provide working capital for WIP Energy and to pay expenses related to the offer. Selling shareholders will get the remaining US$68.5 million. JMMB and Barita Investments have been retained as co-brokers and co-arrangers of WIP Energy’s fund raise.

The people also told the Business Observer that WIP Energy will own the Thrifty Gas service station and plans to add new locations as part of its future growth by partnering with potential operators in managing a dealer-owned, dealer-operated facility that benefits from preferred pricing arrangements.

WIP Energy supplies about 30 per cent of the retail petrol sold in Jamaica with FESCO, UNIPET and Superior Gas company being its biggest customers accounting for just over a third of its sales, the people said.

The company aims to secure a 35 per cent to 40 per cent share of the market in the medium term, building on its partnerships with independent retailers and efforts to broaden its customer base.

The people shared that the company sold more than US$300 million worth of fuel in 2023 and net over US$10 million in profit. Up to end of June, revenues were US$175 million, according to the people who spoke to Business Observer about the transaction, with the expectation that it could cross the US$400-million hurdle when the figures for 2024 are finalised.