NCB Capital Markets buys 20% of Knutsford Express
NCB Capital Markets Limited has acquired 20 million shares, offloaded by Proven Investments Limited last week and valued at about $200 million, in Knutsford Express, the cross-country luxury bus service.
The shares are equivalent to 20 per cent of the 100,000,003 units in the bus company.
The move forms part of NCB Capital Markets' drive to tap into companies listed on the junior market of the Jamaica Stock Exchange in order to provide equity or debt financing.
"At this time, we view Knutsford as a good fit to our portfolio strategy. The company continues to implement strategies aimed at strengthening its business model, a business model that is attractive," Tracy-Ann Spence, assistant vice-president at NCB Capital Markets told Wednesday Business.
Acquisition of the shares becomes the first largest stake by NCB Capital Markets in a junior market-listed company.
"We don't have any significant exposures to other junior market companies at this time," she said.
INCREASING SHARE DEMAND
NCB Capital Markets, the wealth, asset management and investment banking arm of National Commercial Bank (NCB) indicated that demand for Knutsford Express shares continues to increase, resulting in an increase in its fleet of buses and daily departures between Kingston and the western end of the island..
"We believe that management's continued commitment to improving customer service and innovation also augur well for the company. With the new (north-south link of the) highway scheduled to be opened next year, increased opportunities exist. The improving fundamentals of the company bode well for increasing shareholder value," said Spence.
Knutsford Express, led by chief executive officer, founder and majority shareholder Oliver Townsend, raised about $100 million from its initial public offering. The bus company holds some $250 million in equity as at August 2015. It earned $35.6 million in net profit on revenues of $143 million for its first quarter ending August 2015, or nearly double the profit levels a year earlier.
The company earns from transporting locals and tourists across the country, a move which NCB views as attractive.
"Tourism sector-related companies are attractive and we consider that this sector has significant growth potential," said NCB Capital markets.
Earlier this month, NCB Capital Markets announced that it recently received certification from the Development Bank of Jamaica which would allow it to draw down on $7 billion in funding from the state-owned corporation for direct on-lending to small and medium-sized enterprises as well as large businesses.