By NEIL HARTNELL

Tribune Business Editor

nhartnell@tribunemedia.net

A Bahamian investment house is seeking to grow its new private equity fund to $50m within five years of launching to local investors on July 21.

Anthony Ferguson, president of CFAL, told Tribune Business via messaged replies to its questions that CFAL's private equity fund is primarily targeting retail investors - individual Bahamians - by keeping the minimum investment threshold relatively low at $1,000.

Presently travelling in Europe, he added that the Fund will focus primarily on infrastructure and public-private partnerships (PPP) with its first investments aimed at separate elements of the Bahamian energy reforms initiated by the Davis administration.

"The Fund is targeting private equity investments with a focus on all things infrastructure for the retail investors, hence the reason for $1,000. After the success of the [Nassau] cruise port investment for the average person we felt it necessary to provide retail investors the same opportunity as the institutional investors," Mr Ferguson, who is presently travelling in Europe, told this newspaper.

The first two investment targets are EA Energy and Island Power Producers (IPP). The former won the bid to build, own and operate solar and natural gas-fuelled plants supplying Abaco and Eleuthera's power needs, while the latter has secured the deal to supply cruise ships docked at Nassau Cruise Port with 'shore power' again produced by liquefied natural gas (LNG).

The Fund is aiming to raise a collective $20m from Bahamian investors when its offering launches from July 21-29. Some $10m worth of class A and class B shares will be made available, with the proceeds used to acquire separate 10 percent equity ownership interests in EA Energy and Island Power Producers, respectively.

"The reason for EA and IPP at this time is because these are the only two available to the public," Mr Ferguson said of the investment selection. "Should some of the other PPPs go public, the Fund would seek to invest in those provided they meet our due diligence and expected rate of return for the risk profile.

"The Fund always anticipated investing in EA and IPP, and allotted a small amount for the public should they decide to invest. Long-term - over the next five years - provided excellent opportunities avail themselves, we would like to grow the Fund to $50m."

Private equity funds typically invest in, and take ownership positions in, actual companies and businesses with a view to improving their performance. They ultimately exit these positions by selling their interests to another buyer or taking the subject company public via an initial public offering (IPO).

CFAL's private equity fund is being structured as a segregated accounts company (SAC), allowing it to issue different share classes to investors and hold its various company investments separate from one another. This will allow investors to choose which ones they invest in, while also preventing liabilities (and problems) at a company held by the Fund from directly impacting others.

"The Fund will offer two classes of shares during the upcoming offering. The Class A shares will raise $10m to acquire a 10 percent ownership stake in EA Energy. The Class B shares will raise $10m to acquire a 10 percent ownership stake in Island Power Producers," CFAL's marketing materials for the funds said. 

"The minimum investment for each will be $1,000. There is no maximum investment. However, shares will be allocated on a bottom-up basis. Individuals can invest in either class if they wish or both."

CFAL added: "EA Energy has been selected by the Government of The Bahamas to develop microgrids on the islands of Eleuthera and Abaco. The company will build solar and natural gas power plants on both islands under a 25-year power purchase agreement with the Government.

"EA Energy will be 65 percent owned by Bahamian investors and 35 percent by a Turkish partner. The project will be funded with $140m in total investment and is expected to be completed at the end of the 2026 second quarter."

As for the cruise shore power plant, it said: "Island Power Producers has been selected by the Government of The Bahamas to develop shore power for the cruise ships while docked at Nassau Cruise Port. The company will build a natural gas power plant along with regasification and storage facilities to supply natural gas to other Family Islands.

"Island Power Producers will be 100 percent owned by Bahamians. The project will be funded with $180m in total investment and is expected to be completed at the end of the 2026 second quarter." Both EA Energy and Island Power Producers are, in effect, affiliated projects because the capital raised for each to-date has been via offerings overseen by CFAL.

This newspaper reported on April 24, 2025, that EA Energy's $132.5m private placement had seen the $100m bond component fully subscribed for by investors. However, only $21m of the $32.5m equity was taken up, and the $10m that will be sought by CFAL's private equity fund in three weeks' time would largely fill that gap. 

As for Island Power Producers, Mr Ferguson told this newspaper in February 2025 that the $150m project obtained $60m in equity capital before year-end 2024. And, with CIBC Caribbean willing to put up $50m in bank financing, only needed a similar amount to close out its fund-raising.

"We settled at $60m [on the equity portion]. It’s about $150m total. We already have a commitment from the bank for up to $50m. CIBC. We’ve been doing business with them for the last 20 years," the CFAL chief said then.

Capital markets observers yesterday said the $10m sought for the Class A and B series shares, and 10 percent equity stakes that this will acquire, mean that both EA Energy and Island Power Producers have been valued at $100m even though they have yet to start producing energy. They also questioned whether these valuations align with what was previously disclosed publicly.

"The offerings are scheduled for July 21-29. The offering memorandum will be released to the public on July 18," CFAL said of the private equity fund. "The Fund will target investments that can provide a dividend yield of at least 10 percent per year as dividends will be the primary source of returns for investors in the Fund.

"However, as the Fund will be investing in equity, there is no guarantee that the Fund will achieve this objective each year. Both projects have a targeted first dividend payment in 2027, and thus the Fund does not anticipate receiving and distributing dividends until 2027 the earliest."

Management, audit, regulatory and director fees were forecast to equal 1 percent of the Fund's value. "Investors will not be able to redeem their shares for a period of two years from the closing date. Transfers will be restricted for a period of six months from the closing date. Sales will be restricted for a period of one year from the closing date," CFAL said.

"CFAL is proud to announce the launch of the CFAL Private Equity Fund, an initiative designed to support the country’s most innovative and forward-thinking enterprises. This new Fund reflects our belief that private equity has the unique power to drive meaningful change, tackle pressing challenges and fuel sustainable growth.

"We believe these bold strategies will deliver long-term value for industries, communities and future generations."