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Consider This | Investing in Investar’s Titan funds

“We want to help put wealth within everyone’s reach. It’s all about economic democratization.” – Ansel Watson, president of Investar Securities Ltd.

Four weeks ago, Sebas Bastian, the owner of Playtech Systems Limited, which operates Island Luck, the largest domestic gaming licensee, launched two investment funds for Bahamian citizens and qualified residents. The initial offering is scheduled to close on July 19, 2019, and so far, the interest in these investment funds has been phenomenal.

Many Bahamians and qualified residents are considering investing in one or both funds while others are uncertain about whether they are sound investments. Therefore, this week, we would like to consider this… should you consider investing in Investar’s Titan funds?

The funds’ sponsor

Investar Securities Ltd. is a Bahamian company incorporated in 2015 under the Companies Act, 1992 and is regulated by the Securities Commission of The Bahamas. Investar is the sponsor of the two investment funds, namely Titan Balanced Fund Limited and Titan Fixed Income Fund Limited.

Investar’s primary objective is to broaden investment access to financial services by inviting a wide cross-section of the Bahamian community to participate in markets that they might not be individually capable of doing. Where traditional markets have been stagnant or declining, and savings and fixed deposit accounts provide very little return to investors, the Investar funds are designed to grow your investment through the ownership of shares in businesses and private and public investment instruments that have a track record of growth. Investar’s Titan funds offer investors the ability to create original, growth-oriented funds that do not rely on the traditional market.

Investar has organized an impressive executive team and a superlative board of directors to guide and direct the affairs of its investment funds. The board will have overall management responsibility for the funds, establish investment and dividend policies, and select the funds’ service providers.

The board is comprised of veteran businesspersons, including Hillary Deveaux, Felix Stubbs, Dirk Simmons and Heather Hezarian. All told, the funds’ directors, CEO and management represent more than 150 years of combined regulatory, accounting, banking and corporate leadership expertise.

In addition, the funds’ sponsor, Investar, has executed investment management and fund administration agreements with Leno Corporate Services Limited and Genesis Fund Services Limited, respectively, both stellar Bahamian institutions with impressive track records of performance in those disciplines.

Furthermore, legal and audit services will be provided by MacKay & Moxey and Baker Tilly, Chartered Accountants, respectively. The outstanding cadre of professionals who have been retained to oversee the funds’ operations and performance should inspire considerable confidence in their prospects for success.

The investment funds

Investar Securities Ltd. has developed two investment funds: the Titan Balanced Fund and the Titan Fixed Income Fund. These investments have different target markets and provide different investment opportunities for the subscriber.

Titan Balanced Fund

Titan Balanced Fund Limited was incorporated on September 5, 2017 under the Companies Act, 1992. It is designated as an investment fund and is licensed as a standard fund under the Investment Funds Act, 2003. The fund is regulated by the Securities Commission of The Bahamas.

The proceeds into this fund will be invested in equities, money market instruments, Bahamas government-registered stock and fixed income securities. These investments will include only companies, entities and instruments that are registered in The Bahamas.

The fund’s primary objective is to achieve total return through capital appreciation and income from the aforementioned securities.

To invest in the fund, an investor must make a minimum initial investment of $500. That investment represents 100 Class A non-voting shares at $5 per share. Eligible investors will consist of Bahamian citizens who have attained the age of 18 and temporary residents with work permits in The Bahamas. The ownership of Class A shares will be evidenced by a registration receipt instead of a hard copy of a share certificate.

The fund will also issue Class B management shares that will have voting rights but will not participate in the distribution of profits or dividends.

In order to ensure portfolio diversification, the fund will not invest more than 35% of its assets in a single issuer. This does not apply to government securities.

Initially, the fund intends to purchase shares in Playtech Systems Limited, trading as “Island Luck”, but such investment will not exceed 5% of Playtech’s issued shares. However, the fund reserves the right to invest up to 35% of the entire fund portfolio in Playtech.

The fund also intends not to invest more than 55% in securities of issuers in a single industry, other than those securities issued or guaranteed by the government of The Bahamas.

While the fund will not pay dividends, Investar estimates that the fund will grow by 7%–10% annually. This is a considerably higher growth rate than typical savings and fixed deposit accounts in a commercial bank or the current investment market.

The fund’s board is confident that investors will realize considerably higher returns because the fund will leverage the success of the gaming industry portion of the portfolio, Playtech’s shares, which will constitute up to 35% of its assets. In addition to government securities, the Titan Balanced Fund portfolio will include high-performing, low-risk assets.

Titan Fixed Income Fund

Titan Fixed Income Fund Limited was also incorporated on September 5, 2017 under the Companies Act, 1992. It is designated as an investment fund and is licensed as a professional fund under the Investment Funds Act, 2003. The fixed income fund is also regulated by the Securities Commission of The Bahamas.

The proceeds into this fund will be invested in Bahamas government-registered stock, corporate bonds, preference shares with fixed rates, money market instruments and bonds in real estate vehicles. These investments will also include only companies, entities and instruments that are registered in The Bahamas.

The fund’s primary objective is to preserve the principal value of the investment while returning a yield of approximately 25-50 basis points above prime.

To invest in the fund, an investor must make a minimum initial investment of $1,000. That investment represents 100 Class A non-voting shares at $10 per share. Eligible investors will consist of Bahamian citizens who have attained the age of 18 and permanent residents who are ordinarily resident in The Bahamas. The ownership of Class A shares will also be evidenced by a registration receipt instead of a hard copy of a share certificate.

This fund will also issue Class B management shares which will have voting rights but will not participate in the distribution of profits or dividends.

The fund is only available to accredited investors. Accredited investor refers to persons whose net worth is over $1 million, with income in excess of $200,000 in the last two years or with total assets over $5,000,000.

Conclusion

So, the most essential question is: are these good investments? The answer to this is, as it is to most questions: it depends. Investors should always realize that there is an element of risk in every investment and every investment is performance-based. While there are no guarantees, the persons involved in guiding these funds inspire considerable confidence, given their credentials and the nature of the investments that will be included in the portfolio, and investors should be comfortable that the funds will generate reasonable returns with minimum, quantifiable risks.

Investors should also be reassured by the fact that they will be able to increase or redeem their investments in both funds on a monthly basis, subject to the net asset value determined by the fund administrator. The annual audit will further enhance the level of accountability and transparency regarding the investments’ performances.

I fully intend to invest in these funds because I believe that they are well-placed, timely, balanced, well thought out, and supported by a cadre of superlative professionals in whom I have considerable confidence.

The Titan funds offer a real opportunity for economic empowerment for Bahamians. Moreover, I believe that the unique opportunities afforded by the Titan funds are not only good for the future well-being of individual Bahamians, but also will help to strengthen the economic future of The Bahamas.

 

• Philip C. Galanis is the managing partner of HLB Galanis and Co., Chartered Accountants, Forensic & Litigation Support Services. He served 15 years in Parliament. Please send your comments to pgalanis@gmail.com.

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