Sygnus boss seeing opportunities for greater expansion of financing outside traditional sources
THE alternative investment space in the Caribbean is growing considerably fast with the proliferation of opportunities for investors and company to access capital outside of the traditional banking sources.
An alternative investment is a financial asset that does not fall into one of the conventional investment categories. They can include private equity or venture capital, hedge funds, managed futures, art and antiques, commodities, and derivatives contracts.
Berisford Grey, co-founder of the Sygnus Group, one of the Caribbean’s foremost players in the alternative investment space, sees considerable growth in the coming years. Addressing the Jamaica Stock Exchange (JSE) Regional Investment & Capital Markets Conference last week, Grey emphasised that alternative investment as an asset class is growing in the Caribbean and globally.
He advised participants that up to a few years ago alternative investments were non-existent in the Caribbean, noting that in the last four to five years, the Caribbean has seen the emergence of this asset class, particularly with the coming of Sygnus and other such players like Eppley, Portland Private Equity Fund, Proven Investments, PanJam and NCB Stratus.
Arguing that alternative investments are well established across Europe, North America and Asia, providing a new channel through which capital can be assessed by businesses, Grey opined that the Jamaican and regional market are grossly underserved; hence his optimism about its growth potential.
It has been estimated that the English-speaking Caribbean is roughly about US$80 billion in terms of gross domestic product (GDP) with alternative investment space contributing roughly about US$600 million in capital under management. This represents only 0.75 per cent of the market potential with alternative investments contributing about 10 per cent of global GDP.
“So you can see there is tremendous opportunity to grow alternative investments in the Caribbean and the areas where we will see growth in that space is in real estate, private credit and private equity of course; a lot of entrepreneurs are looking to exit their businesses, stock markets like JSE are very active, representing good opportunities to exit and of course, infrastructure,“ the Sygnus co-founder remarked.
He argued that Sygnus is one of the leaders in the alternative investment ecosystem stating that the company has a comprehensive platform, diversification and active particpation in the alternative investment. Grey was asked about bringing more alternative funds to the public equities market.
He responded by explaining that there is a lot of room for more alternative investments funds to go public but was adamant that the time is not right to go to market now. This, he explained, is due to the fact that the market is too volatile, saying as alternative investments ecosystem develops and the market grow, then the public will see more alternative investments coming to the equities market.
Grey stressed that alternative investments are reaping good returns in the areas of private equity and real estate pointing out that among the key investors in this space are pension funds, insurance companies and sovereign funds. He further explained that “over the last decade pension fund allocation in alternative investments have grown north of six per cent per year on a compound annual growth basis. Since the crisis we have seen is increase allocation by pension funds in alternative investments.”