The Tribune

• Recalls decade-old IPO pledge never fulfilled

By NEIL HARTNELL

Tribune Business Editor

nhartnell@tribunemedia.net

The Bahamas International Securities Exchange’s (BISX) chief executive is challenging why the decade-old pledge for an initial public offering (IPO) of the former Bahamas Food Services has yet to be fulfilled.

Keith Davies, in a statement, queried why both the company and the Government have yet to meet a key condition for the approval of the food wholesaler/distributor’s sale to multi-billion US giant, Sysco, in late 2012.

Listing the IPO, which was supposed to offer a collective 15 percent equity stake in Bahamas Food Services to Bahamian investors, as one of his top five priorities for the local capital markets, he said the “listing of Sysco Corporation Bahamas Depository Receipts on BISX... was a part of the sales agreement for Sysco to acquire Bahamas Food Services that hasn’t yet been met”.

Tribune Business records from the time reflect that a 15 percent interest in Bahamas Food Services was to be made available via an IPO to give Bahamians a greater opportunity to build wealth through ownership in some of the economy’s major companies. No details were provided on how it would take place, though, and if it would occur through the issuance of Sysco Bahamian Depository Receipts (BDRs) or other means.

The IPO pledge disappeared off the radar almost as quickly as it emerged, and neither the Christie administration - which approved Sysco’s purchase of Bahamas Food Services from Beaver Street Fisheries - or its Minnis administration successor seemingly showed any interest in ensuring it was fulfilled. However, Mr Davies’ comments have brought the issue back into public focus.

The BISX chief, meanwhile, called for pension fund legislation, the relaxation of exchange controls, greater opportunities for Bahamians to invest in foreign direct investment (FDI) projects, and listings of all major issues on the exchange as critical to both broadening and deepening the capital markets.

“Bahamians need to save more for the future, as this is important to protect existing pension holders but also to ensure retirement savings for persons working now,” Mr Davies said of the need for mandatory pension legislation, while calling for a “continued policy commitment that foreign direct investment would include a sale of a portion of the investment to domestic investors”.

He added: “At BISX we firmly believe that Bahamian investors should have access to projects carried out in our country. In essence, if you make money in The Bahamas you must share it with the Bahamian people.” Mr Davies also called for relaxation of exchange controls “to allow Bahamians living overseas easier access to the Bahamian markets.

“Allowing the Bahamian diaspora easier access into the country helps cement that link to our country but also increases the liquidity of the market,” he said. “Listing of those widely held offerings that aren’t currently listed such as the Nassau Cruise Port; listing on an exchange provides price discovery and transparency that other pricing options simply do not offer.”

Turning to the Bahamian capital markets’ performance in 2022, Mr Davies said BISX’s All-Share Index had enjoyed the largest point appreciation in the exchange’s 22-year history as its value increased by 416.82 points during the year. It also marked the fourth highest percentage appreciation ever for the All-Share Index, which increased by 18.7%

He added: “The Bahamian capital markets showed renewed activity post-COVID. Investors showed interest in investments ranging from listed securities to other projects such as the Nassau Cruise Port project and mutual funds and Government bonds, both those listed on BISX and the US dollar bonds that the Central Bank waived exchange controls on to encourage Bahamians to purchase internationally.

“While BISX may be most concerned with those securities listed on our exchange, we care about the health of the entire capital markets. As a result, we have been pleased with the overall health of the market during 2022.” At year-end, BISX was home to some 71 investment fund listings, with those entities featuring $6.1bn in assets under management.

Of those, 19 were Bahamian-dollar denominated funds with collective assets under management worth more than $1bn. Mr Davies said this is the first time Bahamian-listed funds have crossed the $1bn assets under management mark. “Seeing the growth of funds as an investment vehicle used by Bahamians has been exciting,” he added.

“Funds are frequently a good first step into investing for new investors that allow them to benefit from professional money management and diversification. They also form an effective investing tool for persons in retirement or saving for their children’s education.

“The Bahamian market began its recovery from COVID in 2021 and this continued into 2022 as investors were eager to transact. I’ve also been thrilled with the new queries that we get from investors through our social media channels and via e-mail. Over the quarantine period it’s obvious that Bahamian investors spent time learning more about investing and are now applying their knowledge, and that has been gratifying to see.”

BISX saw its total value of listed securities breach the $10bn barrier in 2022. The market value of listed equities also crossed $6bn in value for the first time in the exchange’s history.