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GraceKennedy acquires 10% more of SigniaGlobe, profit rises to record high

Published:Friday | March 4, 2022 | 12:07 AM
Don Wehby, CEO of GraceKennedy Limited.
Don Wehby, CEO of GraceKennedy Limited.

Food and financial services conglomerate GraceKennedy Limited has acquired an additional 10 per cent stake in the Barbadian holding company that owns SigniaGlobe Finance.

The $401-million deal struck in January with an unnamed seller increased GK’s stake in CSGK Finance Holdings to 50 per cent, GraceKennedy disclosed this week at the release of its 2021 year-end financial results that reported all-time highs for revenue and profit.

“The share purchase brings the group’s total shareholdings in the company to 50 per cent, having previously held 40 per cent of the share capital since 2003,” said the report.

The transaction values CSGK Finance Holdings Limited at $4 billion, with GK holding half.

SigniaGlobe, which is wholly owned by CSGK, offers a series of financial services, including loans, deposits and motor vehicle leasing. It is also a licensed stockbroker and foreign exchange dealer.

SigniaGlobe Financial Group was formed after the acquisition of Globe Finance Inc by Signia Financial Group in 2018, and the subsequent amalgamation of the companies.

The GraceKennedy group turned 100 years old on February 14, having achieved its goal two years prior of becoming a $100-billion company by revenue before reaching its centenary.

To get there, GK began pursuing a series of acquisitions and partnerships that were ramped up under a newly created M&A unit.

Its topline continued growing even during the height of the pandemic in 2020 and into 2021, generating revenue of $115 billion and a new record high of $129.3 billion, respectively.

Earnings also rose from $6.8 billion to an all-time high of $8.94 billion, of which profit attributable to shareholders amounted to $6.2 billion, or $6.28 per share, in 2020 and $8.2 billion, or $8.27 per share, in 2021.

GK has been bullish on finding regional M&A opportunities, and secured billions on the debt market to finance such acquisitions. The M&A activity has boosted GK’s assets to nearly $200 billion, inclusive of $30 billion of cash.

Last July, the conglomerate bought Scotia Insurance Eastern Caribbean Limited, SIECL, for $1.11 billion, with its financial results showing a gain of $593 million on the acquisition; that is, the variance between SIECL’s purchase price and its net assets of $1.7 billion.

“Management assessed that the acquisition qualified as a business combination, resulting in recognition of a bargain gain in the amount of $593.5 million,” said auditor PwC Jamaica.

GK has paid the first instalment of the SIECL acquisition, amounting to $637.8 million. However, the second payment is contingent on whether the company achieves set performance targets this year.

“The contingent consideration is dependent on the relative achievement of a gross premium income target over a period ending October 2022, and payable once the target is satisfied,” GraceKennedy said.

SIECL has been rebranded as GK Life Insurance Eastern Caribbean Limited. It provides creditor life insurance business and operates in Anguilla, Antigua & Barbuda, Dominica, Grenada, St Kitts & Nevis, St Lucia, and St Vincent & the Grenadines.

To mark its centenary, GraceKennedy has planned a series of events and initiatives, including a giveaway of company shares to employees in its international network.