By NEIL HARTNELL

Tribune Business Editor

nhartnell@tribunemedia.net

RF Bank & Trust’s president yesterday said a Bahamian non-bank lender may require a further $10m-$15m drawdown from their $50m small business funding tie-up in as little as “three to six months”.

Michael Anderson told Tribune Business that the investment bank’s financing partnership with Simplified Lending, the prominent non-bank and alternative financing institution, is designed to generate returns for his investor clients while simultaneously improving access to capital for the ultimate recipients of the funds - small and medium-sized Bahamian businesses (SMEs).

He explained that the partnership, for which RF Bank & Trust has already placed and raised an initial $10m tranche out of a $50m bond facility, is designed to provide Simplified Lending with the capital it needs to fully fund job-creating expansion among Bahamian SMEs and, in so doing, accelerate the Bahamian economy’s growth and make it more resilient.

Describing it as a structure where all participants win, Mr Anderson told this newspaper that if demand warranted - and key benchmarks such as Simplified Lending’s debt-to-equity ratios were in line - the bond facility could easily be expanded beyond its initial $50m size.

Pointing out that the bond facility will enhance Simplified Lending’s access to funding that it can then “make available to its clients”, the RF Bank & Trust chief said the partners have already been working together for the last three years with the investment house providing it an earlier $10m facility.

“We’re going to be starting with the larger requirements they have. As their business grows they have an ever-increasing need for funds,” Mr Anderson said of Simplified Lending, adding that the latter is now seeking bigger and more sustainable funding sources. Investor capital injections, via preference shares and other avenues, are no longer sufficient for the non-bank lender.

“We see where Simplified Lending has a significant role to play in the economy in terms of its client base needing access to financing that they struggle to get in other spaces,” the RF Bank & Trust chief added of SMEs. “There’s a big knock-on effect with the lending to the economy. It’s a fairly large multiplier.

“When we lend money to Simplified, it creates investment opportunities for our clients to invest in those bonds. It brings money from Bahamian investors to now lend that money out through Simplified. RF Bank & Trust mobilises Bahamian savings, and creates opportunities to invest with people needing to put capital to work.

“We act as an intermediary to put that capital to work, grow the economy and create investment opportunities. Bahamian money ends up going through a bunch of businesses that need capital. It builds the economy.” Mr Anderson explained that, via this partnership, Simplified Lending will “on-lend” the bond proceeds to SMEs that meet its lending criteria and represent good growth and investment possibilities.

“At some point, we think the bond facility will probably grow larger,” he added. “This business [Simplified] has been growing over the last three years in short period of time. There will be a lot of opportunities over the next three to five years to see this company growing a lot faster. This initial $50m tranche will last for three years. At some point this company will need more capital.

“The facility is up to $50m. We’ll evaluate it going forward depending on the needs of the economy. The idea is to extend the $50m, to extend the line further. They [Simplified] are ready to grow. My sense is that when the money is available and pooled they’ll be comfortable going out and doing transactions they’ve been holding back on waiting for this to happen.

“I do think the next $10m-$15m will not take much more than three to six months. We don’t compete with them. We’re not in that space at all. We lend at the wholesale level, and then allow Simplified to go ahead and lend in the retail space,” Mr Anderson added.

“From our side we have thousands of investors in our pension fund pool and mutual fund pool where funds end up being invested in these bonds and end up financing these other businesses that Simplified lends to. We’re able to mobilise the savings of thousands of people to put them back into the economy.”

RF Bank & Trust said the initial $10m bond offering, which opened on July 17, was closed within 48 hours. The remaining tranches will be drawn down over the next 36 to 48 months to enhance access to capital for Bahamians.

“RF Bank & Trust is pleased to expand avenues for Bahamians to build wealth,” said Gerhard Beukes, vice-president and group head of funds and investment banking. “Across the globe, alternative financing solutions are an important complement to traditional banking, and The Bahamas is no exception.

“By supporting a leading Bahamian company like Simplified Lending, RF is advancing financial inclusion while simultaneously generating returns for our clients, our communities and our economy.”

“At Simplified Lending, we have successfully secured over $200m in financing for our clients, demonstrating our commitment to unlocking financial opportunities and driving economic growth,” said Robert Pantry, its chief executive and founder.

“Our collaboration with RF continues to support our evolution as a direct lender focused on helping small and medium-sized businesses. Since the drawdown of the first tranche in July, we have already approved more than $3m in loans for SMEs, with another $4m currently in the pipeline as they go through the approval process.

“The facility allows us to provide more flexible structures for our clients, and helps us bridge the gap so that small and medium-sized businesses can secure funding until they are able to access more traditional financing from commercial banks,” Mr Pantry added.

“Simplified Lending’s role is to complement the banking sector by filling an important void in the local financial ecosystem. Alternative lenders like us are a critical pillar of any modern economy, working alongside banks to ensure that businesses of all sizes have the resources they need to thrive.”