GK Investments Limited, a subsidiary of the GraceKennedy (GK) Group, has increased its stake in Spur Tree Spices Jamaica from 6.45 per cent to 9.84 per cent.

GK Investments got its initial stake in Spur Tree after converting a $156.76-million short-term loan into 108,108,108 ordinary shares at the company’s initial public offering (IPO) in December 2021. Spur Tree listed on the Junior Market of the Jamaica Stock Exchange (JSE) on January 14 at $1.00 per share. The company closed at $3.67 on Monday and values the original investment at $396.76 million. Its affiliate GK Capital Management Limited was the lead broker and arranger for the IPO.

GK Investments acquired 56,904,023 at $3.78 for a consideration of $215.10 million on March 30 from a director of the company. This leaves the company’s total holdings at 165,012,131 ordinary shares valued at $605.59 million. Spur Tree directors sold 91,936,884 shares or 5.48 per cent of the company (excluding the GK Investments transaction) in March between $3.50 to $3.78.

Steven Whittingham, deputy CEO of GraceKennedy Financial Group (GKFG), who has direct oversight of GK Investments, explained that the latest move by GK is the direct result of GK Capital’s productive partnership with Spur Tree, which it has been cultivating over the past four years. “We have observed Spur Tree Spices principals, their values, and the strength of their brand, particularly during the economic downturn triggered by the COVID-19 pandemic. Their resilience throughout this challenging time has inspired an even deeper confidence in their growth trajectory. We are excited by the prospect that our increased investment will further strengthen our relationship with Spur Tree.”

Spur Tree was GK Capital’s second Junior Market listing after Indies Pharma Jamaica Limited’s listing on August 15, 2018. GK Capital subsequently listed JFP Limited on March 14 in a $280-million transaction where JFP Limited received half of the proceeds.

Further discussing the significance of the investment in Spur Tree, vice-president of investor relations at GK Capital Ryan Strachan commented: “Spur Tree’s solid corporate governance and demonstrated commitment to remaining agile and accountable to their shareholders are positive indicators that factored into the decision to increase GK Investments’ stake in the business.” He explained that the decision to further partner with the two manufacturing businesses GK Capital helped list on the JSE earlier this year (JFP Limited was the second) is also based on the prowess of Jamaica’s manufacturing sector and the value it brings to society.

The JSE and Jamaica Manufacturers and Exporters Association (JMEA) signed a memorandum of understanding in March to work closely with the organisation to assist more companies list on the Junior Market. The JSE expects the agreement to push the total number of Junior Market listings from 44 companies to 100 companies in short order. Home Choice Enterprises Limited and Chocolate Dreams Limited have recently expressed interest in listing on the Junior Market in short order. This coincides with GraceKennedy entering into an agreement with Bluedot Data Intelligence Limited to acquire a majority stake in the business in the form of a private equity investment.

“We are eager to see the outcome of the recent MOU between the JMEA and the JSE to move more of their members to the Junior Market. We encourage SMEs (small and medium-sized enterprises) to explore the option of listing on our local exchange. Of course, GK Capital stands ready to support them to realise their business’ full potential,” said Strachan.