by Richard Coulson
When I visited the East Bay Street head office of Investar Securities at 10 AM Monday June 3rd, a dozen citizens were already there waiting to subscribe to either of the two Titan Mutual Funds being launched. They had been attracted by the intensive publicity campaign that started ten days earlier when over two thousand people gathered at the BahaMar Convention Centre to hear Sebas Bastian and his team tell Bahamians why to consider investing in the Funds, followed by a second-by-second countdown clock shown on print and digital media leading up to Monday’s 9 AM kick-off moment.
This marketing effort had its gestation years ago, when in 2009 Imaginative young entrepreneur Sebastian Bastian founded the Island Luck gaming venture (or “web shop”), which in 2014 became a legally recognized operation regulated by the Bahama Gaming Board. Government granted licenses for eight gaming houses, with premises throughout the country. Barred from our hotel casinos, Bahamians could now satisfy their itch to “play the numbers” on hundreds of screens showing on-line results of U.S. state lotteries. Island Luck (under its corporate name Playtech Systems Limited) soon became the dominant web shop, recruiting and training good managers and technicians to handle the largest number of players—and naturally collecting the highest fee revenues from punters risking their cash against the odds of a pay-off.
The current Fund offering is a classic example of “cross-selling”, practiced by any sales organization: if one product sells well, that creates a captive market of contented customers willing to try another product. The 40,000 account holders of Island Luck have found that its easy-to-play games give them fair odds, win or lose. Naturally, they are favorably inclined to consider an investment product offered by Mr. Bastian.
Island Luck’s success has enabled him to create other ventures, in mortgage finance, property and construction development, and television production, and to found charities. It is in good standing with the Treasury, having resolved financial issues after last year’s increase in taxation rates for gaming companies, with all assessments duly paid.
A sound underlying structure was created for the Titan Funds, which were approved after close scrutiny by the Bahamas Securities Commission. Over-all management responsibility lies with their Boards of Directors and with the sponsoring firm Investar, a licensed securities dealer. Its principals in addition to Mr. Bastian, include such stalwarts as Hillary Deveaux, former Executive Director of the Commission, Lowell Mortimer, attorney and shipping executive, and Felix Stubbs, long-time head of IBM Bahamas. The task of implementing the Funds’ objectives by selecting specific investments has been contracted to Leno Corporate Services, another licensed securities dealer and member of BISX.
The crucial position of Evaluation Agent has been assigned to the BDO international accounting firm, whose local unit is headed by senior practitioner Clifford Culmer. The Evaluation Agent will determine the continuing Net Asset Value (NAV) of the Funds and their underlying holdings, thus setting the price for monthly buying and redeeming of Fund shares. Although this appointment was not named in the initial offering documents, in my interview with Mr. Bastian he assured me it would be confirmed to Fund shareholders
It’s too early to predict total Fund subscriptions during the initial month-long offering period, or how they will be split between the two Funds. There will probably be no shortage of investors attracted to this offering; the challenge will be to quickly turn their cash into appropriate investments. The Fixed Income Fund, with a minimum $1,000 subscription, authorized for Government Bonds and other interest-bearing securities, may initially grow more rapidly, given Bahamians’ traditional preference for current yield over capital gain.
However, the Balanced Fund, available for only $500, has special features that will appeal to more adventurous investors. It can invest up to 50% of its portfolio in equities and special situations, including 35% in Playtech Systems (Island Luck). This investment cannot exceed 5% of Playtech’s issued shares, subject to increase approved by the Gaming Board. Although no financial statements are available, Island Luck is generally assumed to be very profitable, and its fair value in the Fund will be determined by the Valuation Agent.
While our two established investment banks, Royal Fidelity and CFAL, already continuously offer an assortment of well-structured bond and equity mutual funds to Bahamian investors, the special features of the Titan Funds and the more aggressive marketing to smaller investors and Family Island residents may result in a substantial increase in the quantity of mutual funds outstanding. This will be a welcome development, since we sorely need more “economic democracy” evidenced by wider ownership of growth-oriented investment securities rather than bank deposits.
The success of the Titan Funds will be grounded on the reputation of Mr. Bastian and the Bahamas gaming industry, which are now beyond doubt. While there will always be citizens and religious groups who object to monetary games of chance on moral or spiritual grounds—that is their privilege—it’s clear that our economy benefits from the financial contributions and educated employment opportunities. The gaming industry is here to stay.
The views expressed are those of the author, and not necessarily those of WeblogBahamas.com (which has no corporate view) or its Authors.
First published in The Tribune and posted here with the kind permission of the author.
Mr. Coulson has had a long career in law, investment banking and private banking in New York, London, and Nassau, and now serves as director of several financial concerns and as a corporate financial consultant. He has recently released his autobiography, A Corkscrew Life: Adventures of a Travelling Financier.
