GraceKennedy will form two companies, GK Capital Management and GK Properties, arising from the sale of its security dealer, management said.
The entities will emerge as the food and financial conglomerate keeps its stock brokerage licence and monetise some $500 million worth of off-balance sheet real estate.
“GraceKennedy will retain its Jamaica Stock Exchange brokerage licence through a newly formed subsidiary called GK Capital Management, and Courtney Campbell will have full responsibility for that company,” said Wehby, CEO of GraceKennedy Group at the annual general meeting.
GK Capital will offer local and international equities to clients.
It will also offer private equity financing, corporate finance and advisory services including arranging initial public offering to market; fixed income instruments; real estate investment trusts; and leasing.
The capital base of the company is yet to be finalised, but the nimble company will be based in downtown Kingston.
“We are still in the process of finalising the capital allocation to GK Capital. However, the company will be provided with the level of capital required to fund local and regional investment opportunities,” stated Wehby in mailed responses to queries. “GK Capital has a small but experienced staff complement with less, than 10 team members and will be led by Steven Whittingham who is assuming the role of managing director.”
Whittingham currently holds the position of president at First Global Financial Services.
On Monday the group announced the finalisation of the $3- billion sale of its shares in First Global Financial Services to Proven Investments, effective May 30, 2014.
The sale, which does not include First Global Bank, aims to achieve increased income from assets as the financial services delivered about a six per cent return on equity.
GraceKennedy wants a return on equity of 20 per cent but currently achieves about half that amount.
“We also retained off balance sheet strategic real estate properties valued at over $500 million,” said Wehby at the annual general meeting. “So the plan is to set up a company called GK Properties Limited with Lot 21 to be developed along with $500 million in real estate.
“The plan is to convert that into a real estate investment trust and list it on the JSE.”
Wehby expects that plan to materialise in three to four years.
Lot 21 in downtown Kingston will become a commercial centre and include GraceKennedy subsidiary offices currently based in New Kingston.
GraceKennedy reported $941 million in net profit for its first quarter ending March or 21 per cent higher year on year.
Revenue grew 13 per cent to $18.2 billion during the review period as it benefited from stronger insurance and remittance performance.
But the group’s food division saw a profit dip despite higher revenue driven mainly by growth in Europe and Belize.
The GraceKennedy Group currently owns wholly or in part some 50 companies, according to financials.