Tropical Battery Company Limited, through its subsidiary Tropical Renewable Energy, has entered into an agreement to acquire 50 per cent interest in Dominican Republic-based solar photovoltaic engineering, procurement and construction company KAYA Energy Group in a cash and share offer.

Financial closure of the deal will be dependent on the regulatory authorities in Jamaica and Dominican Republic rubber-stamping the transaction. CEO of Tropical Renewables Energy Oliver Hill informed the Jamaica Observer that the company anticipates closure within a month.

When asked about the consideration value of the acquisition, he expressed reluctance, noting that he would prefer not to “pre-empt” any information that will be shared through the Jamaica Stock Exchange (JSE) in short order.

The acquisition of KAYA advances Tropical Battery’s strategy of diversifying its product and service offering and extending its geographical footprint across the Caribbean, a release on the JSE website outlined.

“The deal expands the addressable market for solar power and energy storage equipment distributed under Tropical Battery’s Tropical Renewable Energy division fourfold. It will also enable a vertical integration of Tropical Energy’s business with KAYA’s design, engineering, installation and maintenance expertise,” it stated further.

Formed in 2022, Tropical Renewable Energy serves to establish Tropical Battery’s footprint in the renewable energy and electric mobility solutions space, separate from its automotive products operation.

“This acquisition gives us the whole 360 capacity to develop projects… and control the sale cycle both in the Dominican Republic and Jamaica [which] will really facilitate this transition to a more sustainable carbon-neutral economy,” Hill told the Business Observer.

The vertical integration will allow Tropical Renewable Energy to participate in the renewable energy installation segment in the Dominican Republic, though the division has provided energy storage products to installation teams in Jamaica.

KAYA is an installer in the residential commercial and industrial markets and “they’ve been procuring the equipment for those projects from other distributors, mostly local distributors. So we see the opportunity to become the suppliers for those projects and enjoy those margins that would otherwise go to other distributors,” Hill explained.

KAYA Energy Group’s management will remain at the helm of the acquired company for the foreseeable future as it is integrated with Tropical Renewable Energy. The deal is expected to be accretive to Tropical Battery earnings in FY2023.

When the Business Observer asked if Tropical Battery would take any further interest in KAYA, he said, “Essentially, we have a five-year plan to increase our interest and allow existing shareholders to retain a minority interest. The reason why we went in with a 50 stake is that we’re entering a new market and we want to ensure alignment.”

In addition to facilitating integration, the five-year period will also allow Tropical Battery to better understand the market and leverage product development capabilities while KAYA’s market value increases.

“We are very excited to be integrating our operations with Tropical Energy,” the release quotes KAYA co-founder and CEO Karina Chez.

“This transaction validates all the hard work we have put into building KAYA Energy Group and marks a new chapter in our growth and development. We are proud of what we have achieved and look forward to building an even greater, more regional, platform in the years ahead as part of the Tropical Battery group of companies. Affordable energy independence is within reach for households and businesses across the Caribbean, and with Tropical Energy by our side, it’s more accessible than ever,” Chez added.

At present, Hill said Tropical Battery is building and exploring opportunities in the Dominican Republic, especially since it is a mature market for renewable energy and e-mobility solutions.

While looking for market opportunities in other Caribbean jurisdictions, Tropical Battery will stick to partnering with other companies to secure a foothold.

“We are pleased to be entering the largest renewable energy market in the Spanish-speaking Caribbean in partnership with KAYA Energy Group,” commented Tropical Battery Managing Director Alexander Melville.

“The Dominican Republic has a population of more than 11 million and GDP of nearly US$100 billon, over six times the size of the Jamaican economy, with considerable momentum driving the adoption of renewables. KAYA Energy Group has built an impeccable reputation over the past decade, while spearheading the push for an enabling regulatory regime in the country, and we have a lot of synergies that will propel our combined growth for years to come,” Melville said.

“KAYA Energy Group’s founders share our core values, our regional vision, and our mission to facilitate the transition to a more sustainable, low-carbon economy in the Caribbean by providing world-class renewable energy solutions,” Melville added.