TROPICAL Battery Company Limited, a Jamaican-based energy storage and battery distribution firm, has now launched its additional public offering (APO), making more than 954 million new ordinary shares available to investors at $1.87 each. The move is part of the company’s strategy to reduce debt, following recent acquisitions, and to raise capital for further expansion.

The offer is set to open on May 22 and will run until June 6. The company has indicated that the offer could be upsized to just over 1.12 billion shares, depending on investor demand. Should the offer reach its maximum size, Tropical Battery could raise as much as $2.1 billion, more than doubling its current share count.

Such an increase would position the company to graduate from the Junior Market to the Main Market of the Jamaica Stock Exchange (JSE), as it would exceed the Junior Market’s $500-million capital ceiling and meet the requirements for a Main Market listing.

A portion of the share offer — amounting to 267 million shares — has been set aside for strategic investors, including pension funds and institutional players. These investors will be given priority access to the reserved shares ahead of the offer’s full opening to the wider public. This approach is designed to attract large, long-term investors and provide greater stability to the company’s shareholder base.

The APO comes less than five years after Tropical Battery’s initial public offering in 2020, which saw the company listed on the JSE. Since then, the company has expanded its operations into the United States and the Dominican Republic, partly through acquisitions funded by debt.

One of those acquisitions for the 75-year-old company is the January 2024 acquisition of Rose Batteries, a custom battery pack manufacturer based in Silicon Valley in California, USA. The deal, valued at approximately US$22.8 million ($3.55 billion), was fully financed by Sygnus Credit Investments, which provided two short-term facilities: a three-year convertible preference share facility at 10 per cent per annum and a one-year senior secured bridge note at 13 per cent per annum, both disbursed in January 2024.

To reduce its financing costs, Tropical Battery took out a US$9.5-million ($1.45-billion) bridge loan from CIBC Caribbean in June 2024 at a lower interest rate of 8.5 per cent. This loan was used to pay off the most expensive part of its earlier Sygnus debt. The company now plans to use some of the funds from its upcoming APO to repay the CIBC loan, further reduce interest expenses, and clear a $300-million bond.

“This offering allows us to clear the debt tied to the acquisition and free up cash flow for growth, dividends and reinvestment,” said Tropical Battery CEO Alexander Melville in the prospectus which was released on Monday. “We believe the acquisition of Rose Batteries is not just a transaction but a strategic move promising immense value and returns.”

Rose posted US$3.7 million in net income on US$22 million in sales in the 2023 calendar year. The entity now accounts for more than 40 per cent of Tropical’s total revenue.

For the financial year ended September 2024, Tropical Battery reported revenue of $5.62 billion, double the $2.8 billion earned the previous year. However, one-off costs associated with the Rose acquisition, combined with high interest expenses, saw net profit fall sharply to $34 million. Earnings for the first quarter of its financial year 2025 — covering the period October to December 2024 — fell by half year-on-year to $35.5 million.

Now, with the APO proceeds targeted at clearing the debt load, Tropical expects improved profitability going forward. The offer is being arranged by Sygnus Capital, with Sagicor Investments and NCB Capital Markets acting as co-brokers.

Tropical’s transformation has been years in the making. Since going public in 2020, the company has pushed aggressively beyond its traditional automotive battery business, entering the electric mobility and renewable energy markets and expanding into new territories.

In 2023, it acquired a 51 per cent stake in Dominican Republic-based Kaya Energy, a solar power provider, marking its first major move outside Jamaica. The acquisition of Rose Batteries this year cemented the company’s status as a multinational operation, now serving customers in over 30 countries and multiple high-tech industries — from robotics and medical devices to aerospace and telecoms.

Tropical also launched several subsidiaries to support its long-term strategy. Tropical Mobility, for example, is now selling electric vehicles, including Teslas, and training technicians for after-sales service. Another arm, Tropical Renewable Energy, is focused on solar and clean energy installations, while Tropical Finance is being positioned to facilitate green energy project financing and EV leasing.

Tropical’s operations now span Jamaica, the Dominican Republic and the United States, supported by a network of over 1,000 resellers and retail outlets locally.

Assuming the APO is successful, Tropical Battery plans to graduate from the Junior Market to the Main Market “within 90 days” of the prospectus giving itself a timeline of early August, but the expectation is that the move will take place sometime in July. While the move would end the company’s tax holiday — having only completed four of its 10-year tax remission period — management believes the benefits of Main Market status outweigh the forgone tax savings.

“The broader capital access, improved visibility, and institutional investor interest we expect on the Main Market will support our next phase of growth,” Melville said.

The APO is being conducted on a first-come, first-served basis and applications can be submitted via the GOIPO and eInvest platforms.