Eppley, Jamaica Producers form Capital Infrastructure Group

Eppley Limited and Jamaica Producers Group Limited (JP Group) have formed a Barbadian joint venture called Capital Infrastructure Group Limited (CIG), which will invest in infrastructure projects across the Caribbean.

The publicly listed companies will control and manage CIG as equal partners, which will be funded by capital commitments by both firms along with anchor investor NCB Capital Markets Limited (NCBCM). This will allow JP Group and Eppley to increase the scale and scope of their future infrastructure investments.

CIG was formed on May 7, 2021, with number 45509 as a domestic register with a foreign currency permit. Capital Infrastructure Managers Limited was formed on the same date with number 45508 as a domestic register.

"JP and Eppley each have strong track records of successfully deploying capital on behalf of their investors. We look forward to exploring new infrastructure investment opportunities together," said JP Group Managing Director Jeffrey Hall in the press release.

Standing from left: Anthony Shaw, managing director of the Development Bank of Jamaica; Christopher Zacca, president and CEO of Sagicor Group Jamaica; Minister of National Security Horace Chang; Senator Aubyn Hill, minister of industry, investment and commerce; Audrey Sewell, permanent secretary in the Office of the Prime Minister and Ministry of Economic Growth and Job Creation; Nicholas A Scott, vice-chairman of Eppley Limited; and Yanick Garillon, director, Asia building division and waterworks for Vinci Construction Grands Projects. Seated and signing are: Mark Barnett, president and CEO of National Water Commission (NWC), Matthew Samuda, minister without portfolio in the Ministry of Economic Growth and Job Creation (MEGJC), Prime Minister of Jamaica Andrew Holness; NWC Chairman Michael Shaw; Timothee Delabarre, country manager, Vinci Grands Projets; and Jeffrey Hall, CEO of Jamaica Producers Group.

The announcement comes in the same week in which JP Group announced a merger of its operating assets with PanJam Investment Limited in exchange for a 34.5 per cent equity stake in PanJam. PanJam will be renamed Pan Jamaica Group Limited with a combined asset base of $111.28 billion. That deal is expected to close in the first quarter of 2023 subject to approval by both companies' shareholders at their respective extraordinary general meetings.

While JP Group operates its own logistics and infrastructure segment, including a majority stake in Kingston Wharves Limited, Eppley Limited manages over US$100 million in assets under management related largely to Eppley Caribbean Property Fund Limited SCC (ECPF) and Caribbean Mezzanine Fund II (CMF II). Eppley owns a 25 per cent stake in North Star Development Jamaica (Water) Limited, which is the owner and operator of a well, pump, storage and pipeline system that has been the exclusive provider of drinking water to The University of the West Indies, Mona campus since 2016. Eppley also manages North Star.

ECPF is a real estate mutual fund listed on the Jamaica Stock Exchange, Barbadian Stock Exchange and Trinidad and Tobago Stock Exchange, while CMF II is the first mezzanine credit fund in the English-speaking Caribbean which is co-managed by NCBCM.

"Private sector investment in infrastructure can greatly benefit communities across the Caribbean while offering regional investors a stable, attractive source of income. Eppley is privileged to partner with JP to continue to build our infrastructure platform," added vice-chairman of Eppley Nicholas Scott.

From left: Horace Chang, minister of national security (partially hidden); Mark Barnett, president and CEO of the National Water Commission (NWC); Prime Minister of Jamaica Andrew Holness; Jeffrey Hall, president and CEO, JP Group; Timothee Delabarre, country manager Vinci Grands Projets; Audrey Sewell, permanent secretary in the Office of the Prime Minister; Yanick Garillon, director, Asia building division and waterworks for Vinci Construction Grands Projects.

JP Group and Eppley through CIG formed Rio Cobre Water Limited in partnership with Vinci Construction Grans Projets SAS. Rio Cobre Water has entered into a public-private partnership agreement with National Water Commission (NWC) to design, build, finance, operate a 15-million gallon per day water treatment plant under a 25-year concession. Rio Cobre Water will own the water treatment plant for 23 years, with an option for extension by another five years before ownership is transferred to the NWC.

Rio Cobre was formed on October 25, 2021, with the company secretary listed as Simone Pearson, the group general counsel and corporate secretary of JP Group.

The project will be carried out at a cost of US$77 million ($11.9 billion) over two years and will provide water to NWC customers in Kingston and St Andrew along with Spanish Town and Portmore in St Catherine. Sagicor Group Jamaica Limited (SJ), as lead financier, is providing US$28 million ($4.3 billion) in debt financing with Sagicor Bank Jamaica Limited lending $2 billion and Sagicor Investments Jamaica Limited as the other lender.

Eppley's net interest income rose 36 per cent to $111.94 million for the nine months which was driven largely by its $1.70 billion lease receivables portfolio with interest expense remaining flat year over year. Despite a five per cent increase in its asset management income to $187.74 million, higher expenses and a smaller share of profit from its joint venture saw its net profit decline two per cent to $186.72 million.

Eppley's total asset base increased by two per cent to $5.52 billion, which includes $1.20 billion in loans receivable, $1.03 billion in investment securities and $904.37 million in cash and deposits. Total liabilities increased to $4.46 billion while its equity base closed the period at $1.06 billion.

Eppley's share price is down 10 per cent year to date to $32.47, which gives it a market capitalisation of $6.25 billion. At the same time, JP's share price erased its 2022 losses to be up two per cent at $22.53, giving it a market capitalisation of $25.29 billion. Eppley shareholders will receive a $0.052 dividend on December 15, while JP will consider a dividend or capital distribution at its board meeting on December 2.

BY DAVID ROSE Observer business writer davidr@jamaicaobserver.com

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