In the mid­dle of the worst eco­nom­ic slump in Trinidad and To­ba­go in more than 20 years, four high­ly suc­cess­ful in­vest­ments pro­fes­sion­als took the leap of faith re­quired to set up a new busi­ness sell­ing in­vest­ment ser­vices to lo­cals. KS­BM As­set Man­age­ment got its li­cence as a se­cu­ri­ties com­pa­ny from the Se­cu­ri­ties and Ex­change Com­mis­sion on March 19 and the part­ners im­me­di­ate­ly got to work look­ing to build their client book. The li­cence as a se­cu­ri­ties com­pa­ny means that the firm can of­fer a range of ser­vices in­clud­ing as a bro­ker, deal­er, in­vest­ment ad­vi­sor and un­der­writer.

Among the re­quire­ments to be grant­ed a se­cu­ri­ties com­pa­ny li­cence are that the com­pa­ny must have min­i­mum cap­i­tal of $5 mil­lion (KS­BM has $8 mil­lion) and at least one reg­is­tered bro­ker (the com­pa­ny has two, ex­ec­u­tive di­rec­tors Robert May­ers and Brent Sal­vary). The com­pa­ny has a six-mem­ber board with four ex­ec­u­tive di­rec­tors: chair­man and di­rec­tor of eq­ui­ty in­vest­ments, Robert May­ers, man­ag­ing di­rec­tor Ram­cha­ran Kalicha­ran, di­rec­tor of fixed in­come, Robert Bal­go­b­in and di­rec­tor of fund man­age­ment, Brent Sal­vary. In ac­cor­dance with new gov­er­nance guide­lines, the KS­BM in­cludes two in­de­pen­dent di­rec­tors in for­mer Stock Ex­change gen­er­al man­ag­er, Hugh Ed­wards and busi­ness­man Joseph Elias.

Each of them bring dif­fer­ent strengths to the job: Kalicha­ran's ex­per­tise is in risk man­age­ment, Sal­vary's is in wealth man­age­ment, Bal­go­b­in's forte is in man­ag­ing bond port­fo­lios and May­ers is a vet­er­an eq­ui­ty trad­er with ex­ten­sive ex­pe­ri­ence in se­cu­ri­ties trad­ing, port­fo­lio man­age­ment and fund man­age­ment. All four of the com­pa­ny's ex­ec­u­tive di­rec­tors are for­mer em­ploy­ees of CMMB, the CL Fi­nan­cial-owned as­set man­age­ment com­pa­ny that is now called First Cit­i­zens In­vest­ment Ser­vices. May­ers left CMMB as man­ag­ing di­rec­tor in De­cem­ber 2008, short­ly af­ter CL Fi­nan­cial took 100 per cent con­trol of the com­pa­ny, fol­low­ing its ac­qui­si­tion of 45 per cent from JMMB. Sal­vary and Bal­go­b­in left CMMB in De­cem­ber 2009 and Kalicha­ran in Feb­ru­ary 2010 be­cause they all felt that it was the right time in their ca­reers to move on.

Speak­ing in an in­ter­view at their taste­ful­ly dec­o­rat­ed of­fices in the Ernst&Young build­ing on Sweet Bri­ar Av­enue in St Clair, the in­vest­ment ex­ec­u­tives said that one of the first de­ci­sions that First Cit­i­zens made when it took con­trol of CMMB in 2009 was to in­cor­po­rate the com­pa­ny in­to the state-owned bank rather than run it as an au­tonomous en­ti­ty. This means that the de­ci­sion-mak­ing would re­side ar First Cit­i­zens and, they sug­gest­ed, they were ac­cus­tomed as se­nior man­agers at CMMB to tak­ing de­ci­sions them­selves. They con­cede though that there was a strong busi­ness log­ic in in­cor­po­rat­ing CMMB in­to First Cit­i­zens as it would not have made sense to op­er­ate two as­set man­age­ment com­pa­nies in com­pe­ti­tion in a mar­ket that was stag­nant or in de­cline. Nine months af­ter the start-up of the firm, it al­ready has $40 mil­lion in as­sets un­der man­age­ment.

Much of its busi­ness is based on its book of re­pos–short-term in­vest­ments that are se­cured by debt in­stru­ments such as bonds–which the team be­came par­tic­u­lar­ly adept at dur­ing their time at CMMB. But they say that the com­pa­ny's fu­ture lies in de­vel­op­ing strong as­set man­age­ment ser­vices as lo­cal in­vestors look for pro­fes­sion­als pro­vid­ing in­de­pen­dent ad­vice and not some­one who is look­ing to sell a prod­uct. Apart from its re­po book, KS­BM As­set Man­age­ment pro­vides wealth man­age­ment ser­vices, which in­volves tai­lor­ing a port­fo­lio of in­vest­ments to suit the needs of the cus­tomer and fund man­age­ment, in which they pro­vide in­vest­ment man­age­ment ser­vices to pen­sion funds, in­sur­ance com­pa­nies, cred­it unions and mu­tu­al funds.

The firm sees it­self as an ad­vi­sor to high net worth in­di­vid­u­als and to in­sti­tu­tions. At this time, about 40 per cent of its clien­tele for its short-term busi­ness comes from the cred­it union move­ment, which is the com­pa­ny's largest cus­tomer base. Giv­en the fact that two of the four ex­ec­u­tive di­rec­tors are stock­bro­kers, where do they see the lo­cal stock mar­ket? They de­scribe the mar­ket as be­ing in a wait-and-see mode and their pref­er­ence now is for stocks that are pay­ing high div­i­dend yields. Look­ing to the fu­ture, they are rel­a­tive­ly bull­ish on the prospects for the econ­o­my in 2011, giv­en the start of the Peo­ple's Part­ner­ship gov­ern­ment's pro­gramme of in­fra­struc­ture spend­ing and a res­o­lu­tion to the Cli­co is­sue. "The down­side risk is on the fis­cal side," said May­ers, re­fer­ring to the pos­si­bil­i­ty that nat­ur­al gas prices may not av­er­age what the Gov­ern­ment pre­dict­ed in its 2011 bud­get, lead­ing to a larg­er fis­cal deficit than ex­pect­ed.