NCB Capital sells partial stake Knutsford Express
NCB Capital Markets Limited sold roughly 21 per cent of its holding in Knutsford Express Services Limited (KEX) earlier this month for nearly $300 million.
The transaction more than covered NCB Capital's initial investment in the company back in December 2015. But NCB Capital still holds roughly $1.1 billion in the luxury bus company.
"NCB Capital has sold roughly 20 million units. Depending on opportunities that present themselves, we may decide to sell more," Tracy-Ann Spence, vice-president of investments at NCB Capital Markets, told the Financial Gleaner.
NCB Capital sold the shares in two blocks of 10 million units on February 1 and February 13, but did not disclose the name of the buyer or buyers.
The investment company held 93.86 million KEX shares prior to the sale. Its holdings would now have fallen to just under 74 million units or 14.8 per cent of KEX.
"NCB Capital has realised significant benefit from our investment and we are now seeking to rebalance some of our portfolio and redeploy the funds into new opportunities - on the JSE and otherwise," said Spence.
In the two years in which NCB Capital has held the shares, its holdings in Knutsford Express has climbed from around $200 million to some $1.4 billion. That's a gain on the investment of some 600 per cent over the period.
The stock now trades at $15, valuing the bus company at $7.5 billion.
Knutsford Express provides an alternative service to the public transport system, but it also taps customers from visiting non-resident Jamaicans and other tourists.
NCB Capital acquired a one-fifth stake in Knutsford Express from Proven Investments Limited at the end of 2015, having indicated that it deems tourism sector-related companies as attractive, with significant growth potential.
"NCB Capital still maintains an equity stake in Knustford Express. Our investment strategy includes taking short- to medium-term portfolio positions in attractive companies. As opportunities arise, we may choose to realise all or some of the value on existing investments and reinvest in other opportunities," Spence said on Monday.
"Knutsford remains a solid company and we expect it to continue doing well," she added.
Over the past two years, the company has increased its fleet of buses, and added new routes and trips between the western, eastern and southern ends of the island. Most recently, the company opened a new depot at the Sangster International Airport in January.
The bus company benefited from the opening of the North-South Highway which facilitated more trips on its busiest Kingston to Montego Bay route. Operationally, that translated into rapidly growing revenues, costs containment and the doubling of profits over a series of quarters.
Knutsford Express, led by founder and CEO Oliver Townsend, earned $34.4 million in net profit on revenues of $208 million for its second quarter ending November 2017. That equated to 12.7 per cent more profit and 18 per cent more revenue than a year earlier.