Two large private equity providers, JP Morgan & Citigroup Venture Capital, have teamed-up to bid for 49 per cent ownership of the Bahamas Telecommunications Company (BTC).
Jointly totalling approximately $35 billion in private equity investments, their great purchasing power has allowed them to spend over $2 billion on telecommunications equipment and operations each year.
The newly formed BahamaTel Consortium is now one of four interested bidders qualified to participate in the privatisation process that concluded its first phase on Monday.
Originally, eight companies had placed bids to obtain 49 per cent ownership. The number was later reduced to four companies, which include Blue Telecommunications (Bahamas) Ltd, Detecon International GMBH, Cable & Wireless PLC, Trans World TeleCom Bahamas Ltd and BahamaTel Consortium.
JP Morgan & Citigroup Venture Capital already has presence in The Bahamas and employs about 218 financial professionals in Nassau. The BahamaTel Consortium also includes the BahamaTel Private Equity Fund, a Bahamian mutual fund established to bring broad-based Bahamian participation to the bidding process.
The fund which contributes about $12.5 million to the group’s tender, has capital from six institutional investors, comprising pension funds, unions and insurance companies, and was aggregated using financial and legal advisement from KPMG Financial Services, SG Hambros Bank & Trust and the Lennox Paton law firm.
According to Mr. Thomas Bain, Principal of the BahamaTel consortium and former managing director of JP Morgan Chase, the institutional investors were necessary for the transaction to ensure The Bahamas’ continued development as a capital market.
“We wanted to get Bahamian dollars involved in the transactions ﾖ not because we needed the money, but because we wanted to include Bahamians,” he said. “These visionary investors will sit at the table with JP Morgan and Citigroup as we participate in our own privatisation. I want to feel that we are able to aggregate capital and put it to work.
“We have professional money managers to analyse, study and invest intelligently in a transaction of this kind. It is a part of our nation’s growth ﾖ part of my vision for capital market development in this country.”
Approximately 30,000 Bahamians are reportedly involved in the transactions as a result of the mutual fund.
During his presentation at the Fourth Annual Bahamas Investment Conference held last year October, Mr. Bain said privatisation improves national competitiveness and prepares companies to respond to pressure from international organisations.
“This privatisation is also an opportunity for Bahamians to provide fellow Bahamians with quality service. We have worked a lot at providing better service for our visitors, but it would be great if we could also provide this kind of service for ourselves,” Bain said. “It would mean lower prices and higher quality, a broader national economic base, and a proud place at international tables like the WTO and FTAA.”
Under the ownership of BahamaTel Consortium, it is believed that there will be an improvement of company performance, based pay for enhanced productivity and stock ownership opportunities. Renewed emphasis will also be placed on employee training, an investigation into new information technology applications and customer relations training.
By Lisa Albury, The Nassau Guardian
