By NEIL HARTNELL
Tribune Business Editor
Significant “pent-up demand” should fuel an increase in Bahamian capital market investment activity heading into 2022 with over $400m in transactions at various stages of readiness, a top banker said yesterday.
Michael Anderson, RF Bank & Trust’s president, told Tribune Business that investment activity had largely been on hold for the past eight to nine months once talk of an early general election started to surface coupled with the protracted wait for government-connected entities to finalise their capital raising plans.
With just three months left post-election before year-end 2021, he projected that many of the transactions originally expected to occur this year will likely roll over into 2022. These include potentially $60m to assist the Grand Bahama Shipyard with preparation for its new dry dock, and the $150m that RF Bank & Trust is raising for the Family Island airport upgrades.
Nassau Cruise Port’s $25m initial public offering (IPO) equity raise from Bahamian investors, as well as its remaining $50m-$60m debt financing requirements, will also likely be completed this year. More uncertain, though, is the fate of Bahamas Power & Light’s (BPL) $535m rate reduction bond offering, some $80m of which was to be raised in The Bahamas, and the $70m for Shell North America’s liquefied natural gas (LNG) terminal at Clifton Pier.
Both those projects, and capital raisings, are likely to be put on hold temporarily at least if a new administration is elected, together with a fresh BPL Board and advisers. They will certainly want to review the transactions and ensure they are in both BPL’s and the Bahamian people’s interests before proceeding, which would push both likely into 2022. Collectively, all these transactions are worth around $445m.
Mr Anderson, though, was still bullish on the investment market’s prospects following today’s general election. “Companies looking to raise capital or investments in the market are all going to be circumspect about that given who knows what will happen to any investment if the Government changes or does not change. At the end of the day, everything gets put on hold for eight to nine months until after the election,” he said.
While the anticipated BPL bond issue failed to materialise in time before today’s vote, the RF Bank & Trust chief told this newspaper: “The investment side of the market has been on hold for the last nine months, and when the election is over hopefully that will be a catalyst to get some of these transactions to market.
“There’s a lot of pent-up demand for investments. With the low interest rates at the bank there are a lot of people struggling to find alternatives. Once the election is over, we’ll see more activity. I’m almost sure of it. There’s a huge opportunity for investment. There’s a certain amount of money sitting there, and people would be crazy not to take advantage of the opportunity once the election is out the way.”
The election’s mid-September timing means that the Bahamian capital markets will enjoy just two further months of potential activity before year-end, given that little traditionally happens in the December run-up to Christmas.
Mr Anderson, though, said he “expects 2022 to be a big year”. With The Bahamas well-positioned to benefit from the US tourism revival, he added: “There’s a lot more investment needed in The Bahamas to take advantage of these opportunities, whether it’s businesses raising capital to live off after COVID-19 or setting up new businesses.
“It’s what will drive the economy of this country forward. If we don’t do it, we will be languishing. We need to get money to work.” Mr Anderson said RF Bank & Trust clients currently have a collective $120m capital pool they are looking to invest, with the investment bank having attracted average $12m monthly inflows of investor capital since the start of 2021.