(Jamaica Gleaner) Food and financial services group GraceKennedy Limited is looking towards Guyana as its next insurance market and eyeing other business prospects in the nascent oil economy, where it has been in a years-long battle with the tax authorities.
It’s part of GraceKennedy’s ongoing aggressive programme to grow its operations, in and outside Jamaica, via organic means as well as mergers and acquisitions.
One of the conglomerate’s latest M&A transactions involved the purchase of an additional 35 per cent stake in the Catherine Peak’s water company, which GraceKennedy reported as a $612.5-million deal.
GraceKennedy now owns 70 per cent of the spring water company, which the current transaction values at $1.75 billion. When GK first bought into Catherine’s Peak in 2018, that deal valued the operation at $1.5 billion.
“I have already indicated my interest to the Guyana government, and copied Jampro on it, to start an insurance company in Guyana. As you can see, we have been expanding nicely with the acquisition of Scotia Life and we would like to extend that to Guyana,” said GraceKennedy Group CEO Don Wehby on an earnings call.
GK wants to provide property and casualty insurance, as well as life insurance coverage in that market.
“Hopefully I will get a response shortly,” Wehby said regarding the plans for oil-fuelled and fast-growing Guyana.
GraceKennedy already offers remittance services in Guyana as the Caribbean agent for Western Union.
Wehby also indicated that there were opportunities for GK to deepen its reach in Guyana through agriculture and agro-processing.
“But initially, our interest will be in financial services,” he said.
Via GK Remittances Services or GKRS, GraceKennedy acts as the selling agent for remittance provider Western Union in several Caribbean territories.
In the financial services arena, it operates GKRS Guyana, but food subsidiary GK Guyana Limited remains dormant, according to the company’s 2022 financial report.
“Our Western Union business in Guyana is doing extremely, extremely well,” said Wehby.
“In fact, it is the fastest-growing market in our Western Union partnership in the English-speaking Caribbean. Guyana is hot stuff, and we are going to play in that market.”
Its other remittance markets are: Jamaica, Trinidad & Tobago, Anguilla, Montserrat, St Kitts-Nevis, St Vincent & the Grenadines, the British Virgin Islands, Cayman Islands, Turks & Caicos Islands and The Bahamas.
GraceKennedy is a $200-billion group with assets that are spread across multiple markets in the Caribbean, North America and the United Kingdom.
At year ending December 2022, the conglomerate set a new record for revenues, $142.9 billion, but reported a decline in annual earnings, from $8.9 billion to $7.6 billion.
Wehby blamed the outcome on the constraints GK faced in increasing the price of certain consumer goods despite rising input expenses. He mentioned the retail trade in Canada as being the most resistant to price changes.
In recent years, including during the pandemic, GraceKennedy has been adding to its investments in various businesses, but has mostly growing its insurance footprint in Jamaica and the region.
GK’s most recent investment in the insurance sector was the acquisition of Scotia Insurance Caribbean Limited, SICL, from Scotiabank for $1.115 billion. The transaction is scheduled to close by the end of this month.
SICL offers life insurance services, credit protection for personal loans, residential mortgages, personal lines of credit, and credit cards. It currently operates in 12 territories but is soon to add another, St Martin, Wehby said on the earnings call.
The current insurance markets span Anguilla, Antigua & Barbuda, Barbados, Belize, British Virgin Islands, Cayman Islands, Dominica, Grenada, St Kitts-Nevis, St Lucia, St Vincent & the Grenadines, and Turks & Caicos Islands.
Guyana is the next frontier for insurance services, he indicated, but would be separate from the SICL network, Wehby later told the Financial Gleaner.
As for the tax case, GraceKennedy is now contesting two assessments against GKRS Guyana by the Guyana Revenue Authority amounting to a combined $900 million, excluding penalties and interest.
The first assessment for $253.7 million related to years 2010 to 2016 and is being appealed; the other is for years 2017 to 2021 amounting to $653 million, on which the high court issued a stay of the appeal in February pending the outcome of the first appeal, according to disclosures in the GK financial report.
“Regarding the Guyana tax case, we are still waiting on a date and we are following up with our lawyers. We have employed one of the top lawyers, Dr Claude Denbow, and others to represent us. We feel very confident that we will be successful,” Wehby said.
GK is otherwise contesting another tax assessment, amounting to $418.48 million, this time in Trinidad & Tobago by the Board of Inland Revenue, in relation to an unnamed subsidiary.
On Monday, Wehby also gave on update on the conglomerate’s plans to list aspects of the group on the stock market in the United States.
“We have been having meetings with our investment banker Broadspan Capital and also Citibank. There are some mechanics in terms of the accounting we are working on, but we are on track. It will not be an overnight strategy, but we are working our way carefully,” said Wehby.
“One of our investment bankers told us that the timing is right with GK Foods because there’s a lot of buzz and hype on Wall Street around ‘ethnic foods’. So, the initial feedback has been very positive, but we have some work to do internally before we press the button on listing,” he said.
