The Tribune

By NEIL HARTNELL

Tribune Business Editor

nhartnell@tribunemedia.net

THE Bahamas International Securities Exchange (BISX) has admitted its planned micro-listing tier will be a loss-maker during its infant years, but believes the facility is essential to “bring the entrepreneurial spirit” into this nation.

Disclosing that BISX was engaged in a benchmarking exercise against other jurisdictions to ensure the structure was right for the Bahamas, Keith Davies, its chief executive, said the proposed Small Alternative Market (SAM) was more about “nation building” that profits for the exchange.

The SAM is targeted at established Bahamian small and medium-sized companies, who need to $1 million in capital or less to take themselves to the next level, Mr Davies told Tribune Business it was also designed to overcome the “risk averse” nature of Bahamian society.

BISX, through SAM, is aiming to give Bahamian companies who have progressed beyond the start-up phase an alternative to bank and other traditional financing forms, providing them with a platform to raise both debt and equity financing.

“The SAM market has picked up speed and slowed down at various times,” Mr Davies told Tribune Business. “We have our concept, and our benchmarking our concept with other markets to ensure SAM’s design is best suited for the Bahamian market.”

Similar micro-listing tiers in the Caribbean, he added, all had peculiar structural characteristics to suit their markets, and the Bahamas was no different.

Noting that small and medium-sized enterprises effectively accounted for 95 per cent or more of firms operating in the Bahamas, Mr Davies and Holland Grant, BISX’s listings manager, said this ensured there was a large enough market for SAM to appeal to.

The duo explained, though, that SAM would not be pitched at start-ups, which were more suitable for venture capital financing and angel investors, but companies that had progressed beyond this stage and wanted to further expand.

Drawing on his experience with the Bahamas Entrepreneurial Venture Fund’s Board, Mr Grant said that during its formative years the Fund was “inundated with applications that were not suitable for them to consider”.

Indicating that BISX did not intend to fall into the same trap and spread itself too thin, he added: “We don’t have the time and resources to deal with a huge rush of people.

“The idea is to expand access to the capital markets to smaller companies. It’s mainly existing companies.”

And, emphasising that BISX would not be analysing business plans to determine a company’s prospects of success, Mr Davies told Tribune Business: “One of the things we’re trying to do is bring the entrepreneurial spirit into the Bahamas.

“It’s controlled risk taking. We are a risk averse society. It’s reflected in the banking rates and access to capital.”

SAM’s target market, he added, was a company saying: “I need someone to get me over the hump.” They would have an operating business model, but needed an infusion of capital to help with opening up more stores, for instance.

“We know there are any number of small businesses out there. It’s 98 per cent of the economy,” Mr Davies said.

“Is there a market for this? The absolute answer is: ‘Of course there is.’ But we need to structure this in a way that makes sense.”

The BISX chief executive added: “This is not necessarily a money making venture. There will be fees levied, but in its infancy this is about nation-building and growing the capital markets of the country.

“In its infancy, and it will take baby steps at first, this will be a project over a term of years. It will take time before we see the returns that make it profitable.”

Mr Davies said BISX would operate SAM in a way that did not overburden the exchange with costs and expenses, but argued that it was critical to “make sure we get it right” if the Bahamas was to derive long-term benefits.

“This is not a get it done initiative; this is a get it right initiative,” he added.

BISX had already identified a person to chair the SAM initiative, although Mr Davies declined to reveal their identity. And a Board sub-committee was also overseeing the process.