The Tribune

By NEIL HARTNELL

Tribune Business Editor

nhartnell@tribunemedia.net

RoyalFidelity is now focused on becoming "the premier Caribbean investment bank and wealth manager" after its management-led buyout closed last Wednesday, its president has revealed.

Michael Anderson, pictured, confirming that all necessary regulatory approvals in The Bahamas and Barbados have been received, told Tribune Business that the merchant bank is aiming to grow assets under management by 25 percent over the next year to hit the $1bn mark by end-2020.

Expressing "relief" that RoyalFidelity's purchase from Royal Bank of Canada (RBC) and its parent group had finally closed, some eight months after it was first announced, Mr Anderson said the way was clear to "focus on building our business again".

He revealed that top RoyalFidelity executives, including those from Barbados and the Cayman Islands, will meet in early November to develop a strategy for regional expansion that includes penetration of the eastern Caribbean.

Mr Anderson added that RoyalFidelity's Nassau office will remain the headquarters for its back office functions and information technology (IT) systems, acting as the springboard for its growth plans, and its workforce is expected to hit 50 before year-end via the hiring of four more staff.

He added that RoyalFidelity is aiming for its Caribbean operations to be "if not larger, at least as big as The Bahamas" within the next five years. This nation currently accounts for 80 percent of its activities, and Mr Anderson said he expected local business to maintain its present ten to 15 percent annual growth rate for "the next three years".

Regional expansion, though, stands to get a major boost from the imminent acquisition of its former parent group's Cayman Islands pension administration portfolio, which Mr Anderson said was anticipated to close in early November pending the necessary regulatory approvals.

He added that this would add $150m in assets under management to RoyalFidelity's total, taking it close to the $1bn mark it is targeting for end-2020.

"We closed the transaction Wednesday," Mr Anderson told Tribune Business, adding that his reaction was "one of relief" given that the buyout of previous 50/50 owners, RBC and BISX-listed Fidelity Bank (Bahamas), had first been announced in early February.

"It's just taken a long time," the RoyalFidelity chief added. "It's one of opportunity. Like I said before we've got a huge opportunity to move into new markets such as Cayman. I'm encouraged that we've got most of this out of the way and can focus on building the business.

"The discussions around transactions get complex, and a lot of people are involved, so it distracts from the day-to-day business. We can now focus on building our business again."

Mr Anderson said RoyalFidelity will place great emphasis on its technology platform to drive efficiencies and business development as it seeks to penetrate new regional markets and establish a solid business book in each one it targets.

"We have a strategic meeting at the beginning of November, bringing all of our people together, including Cayman, to talk about how to improve our technology to create efficiencies and develop business across the region," he explained.

"We're looking to grow our pensions and asset management business across the region, not just in Cayman and The Bahamas. As we broaden our business, we have to have the technology available to us to drive and manage that.

"We're centralising administration in The Bahamas to manage that for all the region, so all the back office and IT systems will be run through the Nassau office," Mr Anderson continued. "We've been adding staff since we moved up on East Hill Street in February. We currently have 46 staff, and expect to be at 50 before the year ends."

RoyalFidelity has hired six staff since the buyout was announced, and Mr Anderson said the merchant bank was still finalising employment terms and other issues relating to employees who were expected to come across to it from the former Fidelity parent group.

While its Cayman pension acquisition is expected to close imminently, the RoyalFidelity chief said the initial pace of its Caribbean expansion was difficult to predict. "It's with the regulators, and all information has been supplied," Mr Anderson said of the pension deal. "Some time between the end of October and early November we will get that one closed.

"It's difficult to tell," he added of how quickly the Caribbean roll-out will likely occur. "We've got to enter new markets, start marketing and build a presence. It takes a little while to build results. Next year will be more formative in setting up, and going forward we will expect to see more significant growth."

Mr Anderson said the pace of Caribbean expansion would have to be rapid if RoyalFidelity was to lessen its reliance on The Bahamas, given that it is projected to maintain present 10-15 percent growth rates for the next three years.

"Today The Bahamas is 80 percent, a big part of our business," he told Tribune Business, "but in the next five years we'd expect the other businesses to be, if not larger, at least as big as The Bahamas. Although The Bahamas will have the majority of our business for some time to come, as those markets grow they will gain in proportion to the total.

"We continue to grow our business across all business lines in The Bahamas, each one of our areas growing by a typical 10-15 percent for the last five years. We expect to grow in that same area for the next three years to come. With a high degree of liquidity in the market, and people looking for higher return investment opportunities, we see more people coming in to funds and asset management."

Unveiling RoyalFidelity's goal to become "the premier investment bank and wealth manager in the region", Mr Anderson told Tribune Business: "We want to be a Caribbean regional financial services entity; asset manager, wealth manager and pensions provider. We believe there is a massive opportunity in pensions across the region as more and more people start to recognise the need for pensions."

With the merchant bank's assets under management currently standing at $800m, he added: "We expect to be close to $1bn by the end of next year. The Cayman acquisition will add $150m to assets under management, and we believe by the end of next year we will get to the $1bn mark."