House: businesses to fund rebuilding work
Bermuda's sewage treatment and energy infrastructure are in line for upgrades after the Bermuda Government announced it is seeking a $100 million investment from local insurance companies.
The Bermuda Infrastructure Fund will boost a series of construction projects, create jobs and stimulate economic growth, David Burt told the House of Assembly today.
The Premier said the concept had not been supported by the previous One Bermuda Alliance Government because of a disagreement over the fee to be paid to the fund managers.
However, he said his Government had negotiated an acceptable deal.
Examples of investment opportunities he said the BIF would consider are:
• upgrades to Bermuda's energy infrastructure;
• sewage treatment;
• new port facilities at Marginal Wharf;
• redevelopment of the Hamilton waterfront;
• construction of mixed use residential and commercial buildings in Hamilton.
Mr Burt told MPs Bermuda-based insurance and reinsurance companies have “significant assets”.
He said: “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 Burt said key senior executives of the reinsurance industry had approached the OBA government with the idea.
He said: “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 Burt said Fortress Bermuda Infrastructure Fund GP LLC will be the general partner in the Fund, and that Fortress Bermuda Infrastructure Fund Advisors LLC will be the manager.
He said the Fund is seeking a minimum of $100 million in commitments from Bermuda-based insurance companies.
Management fees will be payable semi-annually in advance, in an amount equal to 0.75 per cent of capital invested. The minimum fee is $1 million per year.
When 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
Fortress Bermuda 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 Burt warned supplementary estimates will be required for the management fees, unless savings can be found from current allocations.
He added: “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.
“This fund is a vote of confidence in Bermuda and a vote of confidence in the co-operative approach to governance that this new Government has taken.”
• To read Mr Burt's statement in full, click on the PDF under “Related Media”