The Tribune

By NEIL HARTNELL

Tribune Business Editor

and NICO SCAVELLA

Tribune Staff Reporter

Sebas Bastian’s Island Luck group yesterday said it was targeting remittance and electronic banking licenses as “top priority”, as it prepares to submit paperwork for an initial public offering (IPO) by next week.

Mr Bastian, the web shop chain’s chief executive, said its investment house affiliate would apply for the licenses once the Central Bank finalised the regulations for electronic payments solutions providers.

He added that Investar Securities would be “a good force” in the sector, given that it could exploit Island Luck’s nationwide physical presence and technology infrastructure to provide such solutions - especially in remote Family Island communities which the commercial banks have withdrawn from.

“We will be applying to the Central Bank for remittance and electronic banking licenses,” Mr Bastian confirmed. “We feel that given our technology background and the infrastructure that we have across the Bahamas, we think that we can use the geographic infrastructure of some of our sister companies, brick-and-mortar locations, to facilitate Investar’s product and services in that electronic payments and electronic services industry. 

“It’s something that’s on our agenda; top priority of our agenda. We’re waiting on the Central Bank to finalise the regulations that, by law, allows them to issue such licenses.”

Tribune Business reported last month how the Central Bank was seeking to make good on its promise to introduce electronic payments regulation by mid-2017, unveiling as short one-month consultation on the proposed supervisory framework that closed on June 9.

The Payment Instruments (Oversight) Regulations 2017 are the first step towards licensing non-bank providers via a formal supervisory framework, bringing them under the Central Bank’s oversight.

This newspaper reported at the time that newly-legalised web shops were among the leading contenders to obtain such licenses, especially since they already have a physical presence throughout the Bahamas.

This, combined with the sophisticated gaming technology they employ, makes them a ‘natural fit’ to provide electronic payments solutions through affiliates, especially since they are already effectively in the money transmission business.

Mr Bastian effectively confirmed this yesterday, adding that he understood the new regulations were intended to cover e-wallets and electronic payments services - the products that Investar Securities wants to offer.

“Currently, Investar has a financial services license and restrictive fund license, so we can do bill payments and fund administration, IPOs etc,” the Island Luck explained. 

“But as a part of our product offering, we’re also adding the electronic payment side of things, and I think we’ll be a good force in that industry because, like I said, geographically we have full coverage of the Bahamas. The convenience factor is key in that industry and we’ll look to capitalise on that.”

Mr Bastian, meanwhile, said Island Luck’s plan to have an IPO ready by May did not materialise because the audit of its financials took longer than expected.

He added, though, that the company had received an ‘unqualified’ audit - meaning it had effectively receive a ‘clean bill of health’ from its auditors - and clearing the way for a potential sale of shares to the Bahamian public.

While no details on the proposed IPO have been made public, Mr Bastian said Island Luck was hoping to supply the Securities Commission, the capital markets regulator, with all material details as early as this week.

“Obviously, we were hopeful to have our offering ready to go by May,” he added. “Our audit took a lot longer than we had originally planned for. But one good thing came out of the audit; we got it last week and it was an unqualified audit, which was a great milestone after being only regulated for the last two-and-a-half years.

“So we have a fully unqualified, clean audit, which is one of the key requirements for funds or IPOs. So though we had everything set to go, without the audit the file really couldn’t move at all down at the Securities Commission. 

“With the audit in hand we are compiling the rest of the submission, and we’re looking to have the submission as soon as next week. And then we’ll just go through the process.”

Mr Bastian described the Securities Commission’s process and requirements as “pretty straightforward”, and said: “We’ve had ample time to gather all the required documentation, which was pretty vanilla in my opinion, so we don’t foresee any hiccups whatsoever in the process.

“Our initial dialogue with the Securities Commission has been very productive. They’ve been responsive, they’ve given us all the information that we’ve requested. I think we’re all on the same page. I think once we add this audit to our submission and finally get it in, we should receive a favourable response in due course.”

Mr Bastian said that while some unlicensed web shop operators remained in business, Island Luck was concentrating on its own operations and leaving the issue to the Gaming Board and the Royal Bahamas Police Force.

He added that Island Luck’s gaming revenues were now starting to stabilise following web shop legalisation, and said: “We’ve given any information that we would have had on it [unlicensed gaming].

“But we stay focused on just doing our business day-to-day, and we’ve started to see revenue stabilise. So it’s really not affecting us today as it was, but I don’t know how that translates to the other players in the industry. But that’s a job for the police and the Gaming Board. We stay focused on the business. We’re not in the business of regulations; we’re in the business of following them.”

Mr Bastian said a web shop’s number of physical locations was immaterial to its success, as companies in various industries had shown it was possible to achieve sustained profitability with just one site.

“I still think that the number of locations any business has, whether it be a liquor store, food store, fast food takeaway or a web shop, the number of locations that business operator decides to put throughout the Bahamas depends on his business plan and his vision for his company,” he added.

“By all means the amount of locations does not contribute to your success, because more locations, more overhead. So if it fits your business model and if it works, more power to you, but if it doesn’t…

“I’ve seen people fail with very few retail locations in various industries, and I’ve seen people become successful with a lot of locations, and I’ve seen people become successful with just one,”Mr Bastian continued.

“I mean, you don’t see Kelly’s have 26 department stores or one out east, one out west. They have one at the Mall and that seems to be a very successful business model. So when you look at things and put it into perspective like that, it’s clear that it’s how you run your business, and it’s not really how many locations you have.

“I’ve seen some of the most prominent chains in our country close locations down, so that should tell you that it has nothing to do with amount of locations, (but) everything to do with how you run a business.