The Tribune

Advisers to a Bahamas-based oil explorer will showcase its £2m investment fund to sophisticated and institutional investors during a presentation at Luciano's this week.

The BPC Investment Fund, which began taking investor subscriptions on January 6, was created by the Bahamas Petroleum Company as a vehicle through which Bahamian investors can enjoy potentially huge returns if it strikes commercial quantities of oil in this country's waters.

Simon Potter, BPC's chief executive, said the company's success could be transformational to the Bahamian economy, and add significantly to the government's revenue base, if its exploration activities strike oil.

"In 2016, the then-government established a framework in law for the establishment of a Sovereign Wealth Fund, not dissimilar to other oil producing countries, [that would be] used for the purpose of harnessing such revenues from natural resources to benefit The Bahamas and its people," said Mr Potter.

"Beyond this, however, we at BPC have long believed that Bahamians should be able to invest in the company, and, in this way, have an interest in their own national resource. We therefore initiated a process via Leno Corporate Services that created a Bahamas-domiciled mutual fund to provide a vehicle for investors to have the opportunity to invest in BPC's project of potentially national significance."

BPC plans to sink its first exploratory well in March/April 2020 in waters about 100 miles south-west of Andros. The drill rig ship will be stationed 15 miles off the Maritime Border with Cuba. Any extractions will go straight from the ship to a cash market.

Khalil Brathwaite, Leno's business development manager, said the BPC Investment Fund is designed for professional investors, such as institutions. However, in the fund's second phase, "BPC intends to apply for a license of a standard fund that will allow ordinary investors to participate". That, though, is subject to external review and approval.

"The minimum investment requirement is $10,000 for the professional fund. Eligible investors that qualify for the professional fund can contact their brokerage company or e-mail Leno Corporate Service at funds@lenobahamas.com," Mr Braithwaite added.

"Leno is very pleased to be able to offer this service as we, along with BPC, believe that Bahamians should have the opportunity to invest in their local resources."

Many Bahamian retail investors are likely to be unhappy at the BPC Investment Fund only being opened to investments made by large institutions, with the perception being that the "small man" is once again being denied the opportunity to make a wealth-creating investment that could drastically improve their economic well-being.

However, others will argue that the fund's status as a "professional" fund is entirely appropriate as the investment opportunity is only suitable for sophisticated investors able to both understand its high reward/high risk potential and absorb any subsequent losses.

For BPC is effectively a start-up, yet to drill its first well and with a history of financial losses. And, for all its research to "de-risk" the project, there is no 100 percent certainty that commercial quantities of recoverable oil lie below The Bahamas' sea bed.

As a result, many capital markets observers will likely view the BPC Investment Fund offering as more a venture capital/private equity investment play rather than an opportunity for small retail investors who can ill-afford any major loss.

Still, it represents an opportunity for institutions who manage funds belonging to thousands of Bahamians to benefit from the potential upside of investing in the lucrative oil industry, even though the BPC Investment Fund's stake in the exploration outfit will be just 4.47 percent if the £2m offering is full subscribed.

The issue, priced at two UK pence (2p) per share, is offering the same price as that extended to BPC's international investors in recent capital raisings. Some 100m shares are on offer, with the minimum investment set at $10,000.