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GK ramps up plans for foreign listing

Hires Nasdaq ESG Advisory, investment bank

Published:Wednesday | February 1, 2023 | 12:05 AM
Group CEO of GraceKennedy Limited, Don Wehby.
Group CEO of GraceKennedy Limited, Don Wehby.

GraceKennedy Limited, a food and financial services group with international reach, has taken tangible steps towards an eventual listing, likely of its food trading operation, on a major foreign market outside the region. Last week, the company...

GraceKennedy Limited, a food and financial services group with international reach, has taken tangible steps towards an eventual listing, likely of its food trading operation, on a major foreign market outside the region.

Last week, the company disclosed that it had hired Nasdaq ESG Advisory to help it secure an ESG sustainability rating, which has become one of the pillars on which companies are ranked.

While GraceKennedy has not disclosed its targeted timeline for listing, Group CEO Don Wehby said on Tuesday that it was an integral part of the company’s Vision 2030 programme under which it is establishing itself as a global consumer group.

“We have engaged investment bankers to advise us on the best exchange to list,” said Wehby.

“Based on our early assessment, Nasdaq is looking good. But no exchange has been excluded,” he said.

The selected advisers were not disclosed.

Wehby also said the conglomerate was eyeing potential listings for two subsidiaries: GK Foods is targeted for a major foreign market; whereas GraceKennedy Financial Group Limited, which incorporates businesses in banking, investment, money services and insurance, is to be listed regionally.

The group operation, GraceKennedy Limited, already trades on the Jamaica and Trinidad stock exchanges.

With $200 billion in assets and a net worth of $73 billion as at September 2022, GraceKennedy Group has operations spanning Jamaica and the Caribbean, the United Kingdom, United States, Canada, Europe and Africa.

The group, which celebrated its centenary last year, has been re-engineering its revenue mix to increase the contribution of foreign markets to its income. The remix has been complemented by an aggressive M&A programme under which the conglomerate has been buying up local and regional businesses.

Jamaica remains its single largest revenue source, however, accounting for around 53 per cent of turnover at last disclosure. Data for year 2022 is pending.

Companies are increasingly being ranked based on their impact on the environment, society and governance, or ESG, amid the global goal of reducing greenhouse gas emissions by 45 per cent by 2030, and to reach net zero emission by 2050. It’s now typical for analyses done on globally listed companies to have an expanded section on ESG, amid the evolution of what is sometimes referred to as ‘green financing’.

“In our preliminary discussions with investment bankers about international listings, one of the requirements that repeatedly comes up is for greater integration of ESG criteria in the way GK does business ... it’s critical to the success of our long-term sustainability and business objectives,” Wehby said.

“GK is headquartered in Jamaica, but we are an international business,” he added.

In Jamaica, ESG remains a conversational issue, but implementation is occurring in developed markets, Wehby noted.

GraceKennedy chose Nasdaq, in part, due to its management of a wide and vibrant exchange in which countless listed companies report ESG in their financials. It essentially developed a standard for ESG reporting.

“This first phase of our ESG journey involves evaluating GK’s current ESG profile, and establishing what our ESG requirements and priorities are. In consultation with our international partners, we agreed that in order for GK to lay a solid foundation for our ESG programme, it was prudent to engage consultants with a well-established track record in the ESG space, with expertise in global ESG standards, international regulatory requirements, and current market trends,” said Wehby.

“We have found that in Nasdaq,” he said. “As we further advance our ESG programme at GK in the years to come, we will bring on other partners (local, regional and overseas) to help guide our journey and achieve our targets.”

Wehby would not disclose the cost of hiring Nasdaq, but said GraceKennedy has “meaningfully invested” to get value for money.

“As with any consultancy agreement, the consultative partner is paid a fee for the services rendered and this is a confidential term of the contract,” he said.

Nasdaq ESG Advisory offers consultative services to develop and enhance companies’ ESG positioning and performance.

Over the next several months, GK will continue to make public its ESG commitments, according to Gail Moss-Solomon, general counsel and chief corporate secretary of GK, and executive sponsor of ESG for the group.

Checks by the Financial Gleaner showed that GK does not have an ESG rating on ‘Simply WallST’, a popular online analyst site that tracks all the stocks in the world using US standards of accounting and ESG reporting.

GraceKennedy’s nine-month financials show a rise in revenue, from $96 billion to $107 billion, but a dip in earnings, from $6.2 billion to $5.6 billion, as at September 2022.

Food trading currently accounts for around 80 per cent of group revenue and half of pretax profit.