The Tribune

• RF already working on up to four deals worth $150m

• And sitting on $150m cash pile in investment funds

• ‘Pent-up activity’ set to drive best year since COVID

By NEIL HARTNELL

Tribune Business Editor

nhartnell@tribunemedia.net

A Bahamas-based investment banker says 2024 is poised to “be a very big year” for the capital markets with companies seeking to raise “at least a couple hundred million” to finance their growth.

Michael Anderson, RF Bank & Trust’s president, told Tribune Business his institution is “already working on four transactions” aiming to collectively raise $150m amid expectation that this will be the year in which long-promised transactions - such as Doctor’s Hospital’s equity capital raise - finally get placed before investors.

With collective private sector capital raises set to potentially double, compared to the $100m worth of transactions seen in a typical year, he added that there was sufficient money waiting for higher-yielding investment opportunities compared to the returns available on bank deposits.

Mr Anderson, revealing that RF Bank & Trust’s family of investment/mutual funds is presently sitting on a $150m cash pile that it is eager to invest for higher returns, told this newspaper that it would again be key to “make sure they’re managed properly” in ensuring the various capital raises are spread out rather than coming to market all at once.

“We see a fairly active market based on some transactions being delayed from last year,” he said. “It was effectively the first full year coming out of COVID, and people came out with plans to raise capital and take on various initiatives in their business.

“But last year ended up being a waiting game through a miss-assessment of opportunities and still having to recover from the COVID situation. A lot of people geared up, but did not get through with their plans and ended up not being properly prepared for them. We see 2024 as being the first year these will start to come through.

“There’s a fair number of investors expecting transactions to come to market that haven’t come. There’s a lot of money looking for opportunities and waiting for transactions to come to market so they can actually invest.”

Mr Anderson hinted this means there should be sufficient market liquidity and capital to satisfy the demands of all potential securities issuers and capital raisers. “From our side we’re working on four transactions already,” he told Tribune Business, while declining to identify the clients. “I think the total capital involved is somewhere in the region of $150m between the four of them and it could be more.

“Some of those are coming from last year that have been taken into 2024, and there are some new ones coming in 2024 and we’re working with them at the moment.... There’s a least a couple hundred million ($200m) of transactions.

“That will be a good year. Most years in The Bahamas you don’t see much more than $100m in a year and that is thought to be a good year. To get a year with a couple hundred million would be unusual,” Mr Anderson continued.

“We’ve had virtually nothing happening in the last three years with the capital markets. There’s a lot of pent-up activity so we should have a very big year compared to the previous three years. Compared to the last four years, we won’t have seen a year like 2024 for a while. This year is setting up to be a lot more active in the capital markets even in just RF.”

The largest post-COVID capital raise in The Bahamas was Nassau Cruise Port’s $135m original bond issue and, prior to the pandemic, the RF Bank & Trust chief identified Nassau Airport Development Company’s (NAD) $130m transaction in 2018 as the greatest issue.

Besides the transactions his investment bank is working on, Mr Anderson said other capital raises are also in play as he pointed to Royal Caribbean’s equity raise from Bahamian investors for its Paradise Island-based Royal Beach Club project.

Bahamians will have an opportunity to hold a collective 49 percent ownership stake in the development, with the cruise giant holding the majority and controlling 51 percent. The Government’s share of the 49 percent will be based on the value of the four Crown Land acres it is contributing to the project, with capital from Bahamian private investors comprising the rest of that stake.

With the details still being worked out, Mr Anderson said of the Royal Beach Club: “I think that will be a large transaction. Based on the last estimate that I saw, it’s a couple hundred million for the entire project. My expectation is that transaction will come to market this year. And as people prepare to provide services to that project they’re raising capital to do what they need to do

“My sense is that generally the market is picking up, mainly in Nassau but there’s some transactions in Freeport that I’ve been hearing about for a while. There are also opportunities we see in the private equity field, and we are speaking to companies about opportunities with our private equity fund for people looking for additional capital but not necessarily going to market.

“And the Bahamas Property Fund is starting to work on a number of potential transactions.” The RF Bank & Trust president added, though, that it would be critical to ensure capital raises are properly scheduled so that they do not overwhelm investors with their capital demands by coming to market all at once.

“It’s a matter of making sure they’re managed properly when they come to market,” Mr Anderson added. “It’s just a timing issue of when they come, but there’s a fair amount of money looking to invest... The banks are still sitting on $2bn in excess cash, which is a fair amount of money.

“The problem is all the money in the banks is not risk capital. You can’t use it as a barometer for how much people will invest. But if you have got $2bn in cash in the bank, assume at least a couple hundred million dollars is sitting there waiting to invest.

“My sense is there’s enough money sitting around to fund what is coming to market this year. My sense is there will be sufficient money in the market for a year or two as people have been waiting for opportunities,” he told Tribune Business.

“If you look at just ourselves as a proxy for the market, we’re sitting on about $150m in cash in our funds, so at least a couple hundred million should be available for investing.”