The Tribune

By NEIL HARTNELL

Tribune Business Editor

nhartnell@tribunemedia.net

While Bahamian fund administrators will be “much more on the hook” than with similar structures, a senior industry executive says the “rewards” from an ICON-ic launch will be worth the risk.

Aliya Allen, the Bahamas Financial Services Board’s (BFSB) chief executive, told Tribune Business that this nation had found “the perfect product” with which to penetrate the investment fund-driven Brazilian and Latin American markets.

Speaking in a recent interview, and ahead of the Investment Condominium (ICON) structure’s August unveiling in Brazil, Ms Allen said there had already been “a great deal of interest” shown by Brazilian clients, intermediaries and funds professionals.

She added that the ICON’s creation provided further proof of the Bahamas’s ability to innovate and develop unique products without compromising this nation’s regulatory reputation and strength.

The ICON is now in the final industry consultation stages before being presented to Cabinet, and Ms Allen said it provided an ideal vehicle to penetrate Brazil, the Bahamian financial services industry’s prime target in recent years.

“I think the challenge is to create a fund for an environment that is very funds driven, that is very familiar to Brazilian investors and managers, and which accommodates their needs for portfolio diversification,” Ms Allen told Tribune Business.

“We think that we’ve found the perfect product to do so. For marketing purposes we’re calling it the ICON. Without selling it too high, it refers to innovation and what we think is the potential for growth in the funds industry as a result.”

The ICON is designed to be fully compliant with Brazilian laws and operate like one of that nation’s products, so is thus intended to target fund-familiar investors looking to diversify away from their domestic market.

“We know we have Brazilians interested in the product already, who are looking to set up funds,” Ms Allen added, “and some are saying they are just waiting for us to launch.

“There is a great deal of interest in the fund.... I think we’re one of the only jurisdictions that develop this type of product, and we think that even though we designed the ICON with Brazil in mind, there’s also a lot of interest in the fund from Latin American countries.

Ms Allen said the ICON would be regulated by the Securities Commission like any other Bahamas-domiciled investment fund structure - a further attraction for investors. She added that the new fund could be incorporated as either a Standard Fund or Professional Fund, or under any of the existing SMART fund templates.

Outlining its main features, Ms Allen said that while the ICON was “not a legal person separate from the investors”, it still retained the features of a ‘corporate personality’, such as the ability to be bound by contracts.

The ICON’s Bahamas-based administrator will act in its name, or on its behalf, placing much more of the compliance/regulatory burden on their shoulders compared to other investment fund structures.

“Because the administrator in the Investment Condominium is given much more responsibility, we do have administrators much more on the hook than perhaps the other structures,” Ms Allen told Tribune Business.

“That’s largely because we don’t have a Board of Directors [for the fund] per se. But we think the rewards will be worth it in terms of increased business.”

The BFSB chief executive added that unlike the Bahamas’ traditional wealth management and asset protection products, the ICON was designed for collective investment and to generate positive returns.

And its launch, targeted for the BFSB’s next promotional trip to Brazil on August 9-15, will also boost this nation’s reputation as an innovator.

“I think it demonstrates that the Bahamas is adaptive, that it is flexible, that it is looking to innovate while not sacrificing the regulatory strength and standing of this jurisdiction,” Ms Allen told Tribune Business.

She added that it also answered the call made by Sean McWeeney QC, Graham Thompson & Co partner and Prime Minister Perry Christie’s key adviser, for more innovation by the Bahamas in financial services industry,

Describing his call at the recent Society of Trust and Estate Practitioners (STEP) Caribbean conference as “a timely message”, Ms Allen added: “It’s very tempting in challenging times to sort of draw down or draw back on marketing and promotional efforts, and investments you make into new products, as you tend to think you need to retrench.”

Yet the Bahamas had set this “conventional wisdom” aside to focus on developing new products, services and policies to spurt growth in its financial services industry.