October 26, 2007
Michael Lee-Chin had his aha! moment for his new Caribbean
investment play two years ago when he was in North Carolina to raise
money for a private equity fund.
In a meeting with state treasurer Richard Moore, Mr. Lee-Chin,
founder of mutual fund company AIC Ltd., learned how the southern
U.S. coasts had become saturated with condos and hotels.
He realized that the Caribbean could benefit from aging North
American baby boomers looking further south for sunny places to
spend time as they begin to retire.
He had already made a fortune in the fund business beginning in the
1980s by catering to the investing needs of the huge demographic
group born in the years after the Second World War. Now they
presented another opportunity, just as he was looking for ways to
diversify his business.
AIC's Michael Lee-Chin
|More recently, he has been
busy investing in the islands in telecommunications, real
estate, health care and financial services firms to cater to
boomers – this time a demographic play in a region rather
than in the wealth management industry.
“The natural spillover will be to the Caribbean,” the
56-year-old Jamaican-born businessman predicted in an
interview at his sprawling head office in Burlington, Ont.
“There will be 78 million [aging boomers] in the United
States alone.… A large percentage of them will be looking
for warmth and coastline for retirement.”
The vehicle for his expansion is his privately owned
Portland Holdings Inc., which owns AIC.
The allure of the Caribbean, he
said, is that it is largely English speaking, a dollar-denominated
region, and a “friendly third border” to the United States after
Canada and Mexico.
He sees Royal Bank of Canada's $2.2-billion deal to buy bank RBTT
Financial Holdings Ltd., based in Trinidad and Tobago, as
confirmation of his belief that the region is poised for growth.
In addition to his personal investments, he has already raised
$300-million for his AIC Caribbean private equity fund. The money
includes an $80-million loan from the Overseas Private Investment
Corp., a U.S. government agency, and investments from the European
Investment Bank and U.S. pension funds.
His latest strategy has emerged since he made his first major
Caribbean investment in 2002, when he saw an opportunity and bought
75 per cent of struggling National Commercial Bank Jamaica Ltd.
“Wealth is created when you find a company or a region that is
relatively inefficient, and you make it efficient,” Mr. Lee-Chin
NCB made an after-tax profit of $6-million (U.S.) in 2001, but that
will approach $100-million for the fiscal 2007 ended in September,
said Mr. Lee-Chin, who is bank chairman.
His bank competes against Bank of Nova Scotia's Jamaican subsidiary,
and jumped ahead as the country's largest bank in total assets just
before Scotiabank bought brokerage firm Dehring, Bunting and Golding
last December. “On pure banking, we've surpassed Scotiabank,” he
Using dividends from the bank, he continued his spending spree in
financial services this year with the $12-million (U.S.) deal to buy
80 per cent of United General Insurance Co., Jamaica's largest auto
In 2005, he partnered with Atlantic Canada seafood magnate John
Risley in the telecommunications industry by investing in
Barbados-based Columbus International Ltd.
Columbus has interests in cable-TV networks in Trinidad and Tobago,
Jamaica and the Bahamas, and controls the ARCOS fibre-optic network
connecting the United States, Mexico, Central America and the
“When you go to the Atlantis Resort in the Bahamas and turn the
television on, it's us,” Mr. Lee-Chin said. “You plug in a computer
to get on the Internet, that's us.”
He has snapped up 700 acres of waterfront property near the Jamaican
tourist hot spots of Ocho Rios and Montego Bay for future condos and
hotels. And he is renovating the luxury Trident Villas & Hotel in
Port Antonio – a community that was once home to swashbuckling
Hollywood legend Errol Flynn.
The country's high crime rate doesn't faze him, particularly because
a new government took power in September, promising to clean up the
streets. “There is a fresh wind of confidence blowing over Jamaica,”
Anticipating a demand for medical services by aging boomers, he
bought Medical Associates Hospital in Jamaica and is close to
another deal. With North Americans heading to India and Thailand for
hip-and-knee replacements and eye surgery because it is cheaper with
little wait time, he wants to offer those services in the Caribbean.
Mr. Lee-Chin will make other Caribbean investments even if they
don't fit into the baby boomer theme. For instance, he owns a stake
in media firm CVM Communications Group, which owns two television
stations in Jamaica, as well as a radio station and two newspapers
geared to youth.
Despite diversifying, the core of his assets still stem from the
three pillars of the Canadian financial services industry these days
– wealth management, banking and insurance.
With wealth management covered by AIC, and banking by NCB, he
recently sold his Berkshire-TWC Financial Group Inc. – his mutual
fund and securities dealership – to Manulife Financial Corp. for
mainly stock to get more exposure to insurance. “I am one of the top
25 largest shareholders in Manulife,” he said.
Even though AIC's total assets have plunged to $8.4-billion
(Canadian) from a peak of nearly $15-billion because of redemptions,
he insisted that his fund company is not up for sale.
The Caribbean foray will also put some eggs in another basket for
He stubbornly clings to his belief that AIC's investment philosophy
– buying good businesses and holding them for the long term – is the
best way to “create wealth” even though it falls out of favour
during periods like the tech bubble in the late 1990s and the
current commodities boom.
He refuses to join his fund rivals in providing different investment
styles to retain assets. “We are not a marketing company,” he
sniffed. “As far as I am concerned, it's not the right thing to do.”
He has the luxury of being able to stick to his guns. “If I were a
public company, I would have been fired for saying we'd rather ride
the assets down because of principles,” Mr. Lee-Chin said. “Because
AIC is privately owned, we can take the volatility of assets.”