Establishment Of Bermuda Infrastructure Fund

November 17, 2017 | 16 Comments

Premier and Minister of Finance David Burt provided an overview on the establishment of the Bermuda Infrastructure Fund in the House of Assembly today [Nov 17], saying that the “Government believes that is in the best interest of Bermuda and Bermudians who are looking for jobs to have International Business invest their funds locally to help stimulate Bermuda’s economy.”

The Premier said, “Bermuda is a global leader in insurance. Bermuda based insurance and reinsurance companies have significant assets, these assets are put aside to pay claims when they arise. The vast majority of these assets are invested outside Bermuda.

“If only a small portion of these funds were invested domestically in the Bermuda economy that would result in significant investments. This would be a very significant inward flow of capital into our economy leading to investments that will create jobs and stimulate economic growth.

“The Bermuda Infrastructure Fund concept was brought to the previous Government by a few key senior executives of Bermuda’s reinsurance industry. These companies have consistently been committed to Bermuda, and they wanted to help ensure that Bermuda was able to return to a path of economic growth, creating prosperity for Bermudians. T

“he recent statistics shows that 2016 was the 7th year of economic contraction in the last 8 years, which shows the urgency that must be placed on economic growth as our future depends on being able to grow our economy and create jobs for Bermudians.

“The originators of the fund idea, realising that they do not have the in-house expertise in infrastructure investment necessary to manage the fund professionally, approached Fortress Investment Group who agreed to act as manager.

“Fortress Investment Group LLC is a leading, highly diversified global investment management firm. Fortress applies its deep experience and specialized expertise across a range of investment strategies – private equity, credit, liquid markets and traditional asset management – on behalf of over 1,600 institutional investors and private clients worldwide.

“The former Minister of Finance did not support this fund as there was a disagreement on the management fee that was to be paid to the fund managers. This disagreement prevented the fund from becoming a reality.

“Upon taking office the concept was presented to this Government, and following a period of negotiation we were able to arrive at a suitable agreement to proceed which granted the Government a seat on the board in exchange for a guarantee of the minimum management fee.

“The Government believes that is in the best interest of Bermuda and Bermudians who are looking for jobs to have International Business invest their funds locally to help stimulate Bermuda’s economy.

“Given the confidence we have in the future of Bermuda and our desire to support infrastructure development, The Government has agreed to support the establishment of the Bermuda Infrastructure Fund.

The Premier’s full statement follows below:

Mr. Speaker, I rise today to advise Honourable Members of the establishment of the Bermuda Infrastructure Fund.

Honourable Members will recall that Government’s vision, expressed in our election platform titled “An Agenda for a Better and Fairer Bermuda,” was to implement the “National Infrastructure Strategy Plan.” The purpose of this Plan is to identify important improvements and repairs to Bermuda’s infrastructure that will not only enhance the overall quality of life but will also create business opportunities for construction companies and jobs for Bermudian construction workers.

Mr. Speaker, Bermuda is a global leader in insurance. Bermuda based insurance and reinsurance companies have significant assets, these assets are put aside to pay claims when they arise. The vast majority of these assets are invested outside Bermuda. If only a small portion of these funds were invested domestically in the Bermuda economy that would result in significant investments. This would be a very significant inward flow of capital into our economy leading to investments that will create jobs and stimulate economic growth.

Mr. Speaker, the Bermuda Infrastructure Fund concept was brought to the previous Government by a few key senior executives of Bermuda’s reinsurance industry. These companies have consistently been committed to Bermuda, and they wanted to help ensure that Bermuda was able to return to a path of economic growth, creating prosperity for Bermudians. The recent statistics shows that 2016 was the 7th year of economic contraction in the last 8 years, which shows the urgency that must be placed on economic growth as our future depends on being able to grow our economy and create jobs for Bermudians.

The originators of the fund idea, realising that they do not have the in-house expertise in infrastructure investment necessary to manage the fund professionally, approached Fortress Investment Group who agreed to act as manager. Fortress Investment Group LLC is a leading, highly diversified global investment management firm. Fortress applies its deep experience and specialized expertise across a range of investment strategies – private equity, credit, liquid markets and traditional asset management – on behalf of over 1,600 institutional investors and private clients worldwide.

Mr. Speaker, the former Minister of Finance did not support this fund as there was a disagreement on the management fee that was to be paid to the fund managers. This disagreement prevented the fund from becoming a reality. Upon taking office the concept was presented to this Government, and following a period of negotiation we were able to arrive at a suitable agreement to proceed which granted the Government a seat on the board in exchange for a guarantee of the minimum management fee. The Government believes that is in the best interest of Bermuda and Bermudians who are looking for jobs to have International Business invest their funds locally to help stimulate Bermuda’s economy. Given the confidence we have in the future of Bermuda and our desire to support infrastructure development, The Government has agreed to support the establishment of the Bermuda Infrastructure Fund.

Mr. Speaker Key features of the Fund are as follows:

  • The Fund is being formed primarily to make investments in Bermuda-based infrastructure assets and opportunities
  • The General Partner will be Fortress Bermuda Infrastructure Fund GP LLC & The Manager will be Fortress Bermuda Infrastructure Fund Advisors LLC
  • The Fund is seeking a minimum of $100 million in commitments from Bermuda-based insurance companies
  • Management Fees are payable semi-annually in advance, in an amount equal to .75% [1.5% annually] of capital invested. The minimum fee is $1 million per year
  • In the event that the Management Fee is less than $500,000 in a semi-annual period the Government must pay the difference. The amount paid by Government will represent an interest in the Fund.
  • Government will be liable to pay the initial management fee of $500,000 and will be liable to pay some fees as long as the amount invested by the fund is below $66.7 million
  • The General Partner will establish an Advisory Board composed of representatives of certain limited partners and a Government representative.
  • The Fund may borrow funds to facilitate investments or otherwise in connection with the Fund’s business

Mr. Speaker, there are many potential investment opportunities for the Bermuda Infrastructure Fund to consider. Some examples are as follows:

  • Upgrades to Bermuda’s Energy Infrastructure
  • Sewage Treatment
  • New port facilities at Marginal Wharf
  • Redevelopment of the Hamilton Waterfront
  • Construction of mixed use Residential & Commercial buildings in the City of Hamilton

Mr. Speaker, Honourable members are advised that there is no budget allocation for the Management Fees that have to be funded by Government for this proposal; therefore unless savings can be found from current allocations, a supplementary estimate will be required. It is important to remember that Government will receive an equity stake in the fund for any payments made which will rank equally with other investors.

Mr. Speaker, in closing, the offer to establish this fund is a vote of confidence in Bermuda and a vote of confidence in the cooperative approach to governance that this new Government has taken. In the words of the former Premier, the Hon. W. Alexander Scott, “Bermuda works best when we work together”. This government is committed to working together with all partners that are interested in genuine collaboration to grow Bermuda’s economy and create jobs in Bermuda that Bermudians can and will fill.

Thank you, Mr. Speaker

Share via email

Read More About

Category: All, Business, News

Comments (16)

Trackback URL | Comments RSS Feed

  1. jt says:

    Good luck!

  2. skeptic says:

    While the idea has good potential, the fact that this is already in a specific set of terms, appears very rushed. Where is the transparency about Fortress and why they are the best choice? There are many firms that work in this space, is Fortress the most likely to succeed and how was that determination made? Who else was considered as potential managers? Why are the fees payable in advance and is the fee proposal competitive? Are there performance fees as well? Huge volume of unanswered questions…

  3. Um.... says:

    I’d like to hear from the Premier and Minister of Finance on matters pertaining to the debt. I think this is a good idea. And I also see that the BUT are getting a small pay raise which is positive to help keep qualified teachers from leaving. But how does all of this and other initiatives affect the debt?

  4. Mark says:

    What? isn’t this the exact same thing as the airport?

    “recent statistics shows that 2016 was the 7th year of economic contraction in the last 8 years” what? isn’t that the exact opposite of the figures?

    “The Bermuda Infrastructure Fund concept was brought to the previous Government by a few key senior executives of Bermuda’s reinsurance industry. These companies have consistently been committed to Bermuda, and they wanted to help ensure that Bermuda was able to return to a path of economic growth, creating prosperity for Bermudians” but I thought you wanted them all to leave? you’ve already run jobs out of the country to Cayman.

    Im confused by all these contradictions…

  5. Memberberries says:

    So how is this different from the airport deal? Investors will have to realize some sort of return in exchange for an infrastructure build/upgrades…

    • Mark says:

      Its not. Its callef hypocrisy which ia the plp specialty. Their mindless followers will praise them for it. Trump style politics have arrived. The plp voters are the trump followers.

  6. Joe Bloggs says:

    “Redevelopment of the Hamilton Waterfront”

    Does that mean that the Corporation of Hamilton will be dissolved so that the Hamilton Waterfront will be owned by Government and not by the City of Hamilton?

  7. Rocky5 says:

    Wonder what the Credit Rating Agencies think of this?

  8. Rocky5 says:

    Sewage Treatment – no more cesspits?

  9. Bill says:

    I am looking for a word for when someone does exactly the opposite of what he speaks or does. Is there any word for this? For e.g. the airport deal was a private/public partnership to build a new airport because the Bermuda gov didn’t have enough money to build it. This someone protested, was against it because it involved a foreign company and claimed that we were selling our airport to bla bla bla. Now this guy is saying that we should try to get International Companies to help our infrastructure through a fund and correct me if I’m wrong let a foreign company manage the funds. What deals are you going to make now and shall we all go up to the hill to protest??? The insurance companies do a lot for the island as it is, directly and indirectly. Almost every major event is sponsored by an insurance or reinsurance company. They donate to charities, do cleanups, scholarship programs etc etc. Now you are gunna piss them off by implementing another way to tax them.

    • Rational Observer says:

      The Infrastructure Fund was the brainchild of some of the exempt companies and their executives, no one is forcing (or taxing) any exempt company to place funds in it. So they will not be “pissed off” rather they want to see Bermuda succeed as do we all. And the second argument that it is similar to the airport deal is spurious: this deal involves finding finance for infrastructure projects on the island, not forfeiting an asset for an indeterminate period. (Of course on another note the existing airport could be viewed as a liability not an asset).

  10. Aware says:

    This is a very good idea and will align the interests of the participating investors with the community in which they operate. A very positive thing

  11. Sherbet man says:

    All hopes jokes n dreams lol

  12. A.L. Gracie says:

    Hey Rocky, we need to eliminate the three largest ones currently in use:-Until then we are no better than a third world country….and Appleby thought that the “Paradise Papers were embarrassing……

    Sea Bright Outfall…600,000 gals daily from the City of Hamilton
    Pembroke Marsh…Raw Sewerage Sludge burial from Tynes Bay…volume unknown
    Tobacco Bay outfall from St Georges area…100,000 gals daily

    How is this going to happen?

    Most of you/us already contribute daily to this issue, that entitles you to become an automatic member to the Solution. Simply email your support to the address below….for more information

    POOP in Paradise. ( People Opposed to On/Offshore Pollution )

    The (unmentionable) utility that has been conveniently ignored/forgotten about…
    A portion of the Sea Bright outfall pipeline is in critical condition, prior recycling treatment will mitigate the risk to our foreshore and tourism, will enable recycling of water back into the city, and eventually recharge the nearby lens.
    Will eliminate the bio-sludge burials at Pembroke Marsh with the leaching back into Hamilton Harbor. The resulting dry solids will be incinerated for additional electricity generation.
    Proposals are being considered by the C of H , W & E along with a local private entity to provide long term solutions to this archaic back yard toilet habit.
    A Water Resource Recycling Facility will take care of our needs for the next 100 years, and become a model for other jurisdictions.
    A ( low NIMBY ) location has been identified, private funds have been identified.
    W & E also require a system for Tynes Bay and St. Georges, this new Infrastructure Fund will provide financing for those facilities.
    Get real Bermuda, how long can we continue to contaminate our own back yard!
    Need any more convincing? email me at sweetwatersolutions@logic.bm

  13. Ringmaster says:

    How is it when someone like Bob Richards, who is in the investment arena daily sees this as a non starter, but Premier Burt says it’s great? In companies, to be a finance director you have to have experience and qualification yet to be Minister of Finance in Government there are no such requirements? Sums it up very neatly. Bermuda is finished.

Leave a Reply

="banner728-container bottom clearfix">