The Tribune

By NEIL HARTNELL

Tribune Business Editor

nhartnell@tribunemedia.net

A Bahamian investment bank yesterday said it had taken “a major step towards” realising its Caribbean expansion ambitions by finally closing the purchase of a $150m Cayman-based pension portfolio.

Michael Anderson, pictured, RoyalFidelity Merchant Bank & Trust’s president, told Tribune Business that its “year of dealing with regulators” in multiple jurisdictions had ended on January 3 when final approval was received for the acquisition of its former affiliate’s pension administration business.

Besides completing the final deal linked to the investment bank’s buy-out from its former Fidelity parent group, Mr Anderson said the latest acquisition gives it the springboard for further growth in the Cayman Islands and expansion into other Caribbean territories as it seeks to become “a regional player”.

He revealed that apart from RoyalFidelity obtaining an instant 20 percent pension administration market share in the Cayman Islands, the deal also provides the platform for the investment bank to sell its other investment banking and wealth management products - such as investment funds, trusts and brokerage services - into that lucrative market.

The Bahamas-headquartered investment bank has already begun applying for the necessary regulatory approvals to do this, its president revealing that he expected to receive the necessary authorisations over the next three to six months as its assets under management head towards the $1bn mark.

Mr Anderson also explained that, together with The Bahamas and Barbados, the acquisition gives RoyalFidelity a presence in three territories from where it will seek to exploit the “huge opportunity” to push into other Caribbean markets and fulfill growth plans that had to be “deferred” under its previous ownership structure.

“We managed to close the purchase of the Cayman business on January 3,” he told Tribune Business. “It’s part of RoyalFidelity’s regional expansion plans for its pension administration business and becoming a Caribbean player. Closing the Cayman transaction is a major step towards that.

“Fidelity is close to about 20 percent market share in the pension business in Cayman. It’s a nice business to start our presence in Cayman with. We finally managed to get regulatory approval and get all the transactions sorted out after a year of dealing with regulators. It’s a big relief to get them all closed, and all the businesses up and running and ready to do business.”

RoyalFidelity acquired the pension administration business from its former affiliate, Fidelity Bank (Cayman), as one of a series of transactions that centred on its management-led buyout from its former parent group and Royal Bank of Canada (RBC). The latter deal closed last year, with RBC and Fidelity Bank (Bahamas) selling their respective 50 percent stakes in RoyalFidelity to current ownership.

Mr Anderson said the investment bank is now able to focus solely on its growth ambitions with these transactions behind it, with the first objective involving the expansion of its Cayman offerings on the back of an acquisition that adds $150m in assets under management.

Disclosing that RoyalFidelity planned to expand its Cayman-based staff by between 10-15 persons over the next two years, he told Tribune Business: “Now we’re focusing on getting involved in running the pension business down in Cayman, but also pushing out the other products and services RoyalFidelity offers in The Bahamas and Barbados into the Cayman market.

“We’ve begun applying for licences to provide all the services we do in this market. Over the next three to six months we expect to obtain the necessary licences in Cayman to allow us to broaden our product and services offering similar to what we offer in this market.”

Already looking beyond RoyalFidelity’s latest territory, Mr Anderson continued: “I think the Cayman presence allows is a greater opportunity for expansion into islands like Turks & Caicos and Jamaica, together with our expansion initiative from Barbados into the region.

“The plan is a regional development strategy through these three offices. We hope to be able to create regional distribution for our products and services.” The RoyalFidelity chief acknowledged that “it’s not been that common” for Bahamian-originating businesses to seek expansion beyond this nation, but said his background lay with companies that had sought a regional approach.

He revealed that the investment bank had been planning a Caribbean expansion under its former owners, but was forced to place it on hold after RBC acquired Royal Bank of Trinidad & Tobago (RBTT). This meant its ambitions would have completed with RBC’s own strategy, the potential conflict negating any move forward.

“The expansion opportunities had always been there,” Mr Anderson revealed. “We worked with RBC to create a regional bank and wealth manager. After the RBTT deal we were unable to expand into a number of areas we had hoped to, and had to defer the expansion.

“Now, with the exit from the joint venture (Fidelity/RBC ownership), we’re free to go and recommence the expansion plans. There’s lots of small markets, and the difficulty in the past has been trying to access them. For larger players it’s not been worthwhile to build scale.

“For us, who have evolved in dealing with small markets, and with available technology making it easier to get access to small markets and service them, when we look at their combined populations there’s a huge opportunity if we’re able to provide a broader range of services to a lot more people,” he added. “But we’ve got to get it right.

“We’ve been planning this for the last year, and are ready to move forward, so we are excited about the opportunity. I expect to see reasonably strong growth over the next two-three years because we have certain products and services suitable to these markets. Our plan is to become the premier investment bank and wealth manager in the region.”

Mr Anderson had previously told Tribune Business that the Cayman pension portfolio’s acquisition would “more than double, maybe even triple” RoyalFidelity’s portfolio in terms of “pension lives” covered, adding 10,000 clients to the existing 4,000 it has presently.