The Tribune

* Agrees deal to sell Cayman bank

* Close would complete island exit

* But 'no fire sale' in The Bahamas

By NEIL HARTNELL

Tribune Business Editor

nhartnell@tribunemedia.net

Fidelity Bank (Bahamas) will “not be a cheap buy and flip” for a majority shareholder that has moved one step closer to exiting the Cayman Islands financial services market.

Gowon Bowe, the BISX-listed bank’s chief executive, told Tribune Business that Fidelity Bank & Trust International is undertaking “no fire sale” of its Bahamian interests after it emerged late last week that it has signed an agreement to sell Fidelity Bank (Cayman) to a Jamaican purchaser.

Confirming that Fidelity Bank & Trust International has signed an agreement to sell 100 percent of the Cayman bank’s share capital to Proven Investments, Mr Bowe said Fidelity Bank (Bahamas) - in which it holds a 75 percent majority interest - will now be the group’s “principal asset” moving forward.

The Cayman deal effectively represents a further break-up of the Fidelity group’s financial empire, which was created in the mid-1990s through its management-led buyout from Dawood Rawat’s British American interests.

Its Bahamian investment banking arm, the former RoyalFidelity Merchant Bank & Trust, has been renamed RF Holdings following its own management buyout from the group last year. RF Holdings also acquired its former parent’s Cayman-based pension business, while RoyalStar Assurance teamed with Trinidad’s Guardian Holdings to purchase the Fidelity Insurance (Cayman) brokerage business.

Mr Bowe, though, emphasised that Fidelity Bank & Trust International is not a forced seller in any of these transactions. He explained that the deals had been driven by the fact that several of the group’s key shareholders were approaching retirement age, and are seeking to maximise the value of their holdings as they seek to “redirect their investment priorities” to less risky areas.

Anwer Sunderji, Fidelity Bank & Trust International’s principal shareholder, and architect of the mid-1990s buyout from Mr Rawat, has been ill for some time. However, Mr Bowe reiterated that Fidelity Bank & Trust International shareholders are not taking a “sell at any cost” approach but, rather, only entertaining offers from serious buyers who desire to be long-term players and grow the business.

He added that the group’s Cayman businesses were “more valuable to suitors” as individual units rather than as part of a group, with Fidelity Insurance (Cayman), in particular, a good strategic for RoyalStar Assurance/Guardian Holdings as it wrote a significant amount of business for them and provided a key distribution channel.

And Mr Bowe said approaches for the majority interest in Fidelity Bank (Bahamas) will only be entertained if potential purchasers can show they are “in it for the substance” and long haul, with access to the necessary capital and expertise required to expand the business and grow operations.

“There’s no intent to sell at any cost,” he told Tribune Business. “Where we are not able to realise full shareholder value, the shareholders are confident in management’s ability to run it and ability to extract profits from operations....

“The Fidelity group, realising our public interest, realised we needed to protect the capital of the group and look at its financial strength going forward. What that meant, knowing some shareholders were looking to withdraw, we needed new capital or new strategic partners.

“Ultimately, the best way to describe it is for new capital to be injected for those approaching retirement and their different priorities in life.” However, as these shareholders seek the best way to monetise the value of their holdings, Mr Bowe said this does not involve an exit at any price.

He added that Fidelity Bank & Trust International shareholders were especially conscious of the minority 25 percent Bahamian public interest in Fidelity Bank (Bahamas), and the need to both protect and grow local ownership moving forward.

“What I will say is we always have to be open to it,” Mr Bowe said of a Fidelity Bank (Bahamas) sale, but the reality is it’s not an easy industry to exit. There are a number of people that would like to buy, but they want to buy on the cheap. Every time there’s negative activity in the economy people want to buy.

“People always make overtures. The shareholder instruction that was initiated was how to maximise shareholder value while maximising local ownership. The Bahamas has a much larger public interest that has to be considered.

“I don’t think there’s any commercial banking interest that has at least not heard from potential suitors, but finding the right strategic mix and alliance is not easy,” Mr Bowe added. “The Bahamian bank (Fidelity Bank Bahamas) has $100m in equity, $700m in assets. We’re no longer a dismissed player.

“Any player interested in us has to look at the long-term with a local focus. We’re of a size that the investment has to be for a very strategic purpose. We’re not going to be a cheap buy and flip. The commitment of the equity has to be for a very long time.

“We were achieving 25 percent return on equity for the past three years, even excluding the RoyalFidelity sale, pre-COVID. If you’re making 25 percent return on equity, anyone coming to buy in the future, their philosophy has to be to build out Fidelity Bank (Bahamas). It has to be someone who would achieve that level of returns or even greater.”

Mr Bowe said Fidelity would likely retain ownership of its Cayman asset, and be involved in the transition to Proven’s ownership, for at least six months with the conditions. The price and other terms were not disclosed.

Proven Investments is part of a financial services group that was founded by now-Jamaican opposition leader, Mark Goulding, and his former Cabinet colleague, Peter Bunting. Another key player was former Bahamas Telecommunications Company (BTC) chief executive, Garfield “Garry” Sinclair.