Case Study: London & Capital, Barbados

I first met William Dalziel, the partner in charge of Institutional business at London & Capital, in the summer of 2015. We were introduced by a mutual colleague in Barbados, who was very excited for us to meet. This colleague explained that London & Capital was a boutique asset manager headquartered in London, U.K., specializing […]

By Lisl B. Lewis, B. Eng (Hons), FCA

February 2, 2018

I first met William Dalziel, the partner in charge of Institutional business at London & Capital, in the summer of 2015. We were introduced by a mutual colleague in Barbados, who was very excited for us to meet. This colleague explained that London & Capital was a boutique asset manager headquartered in London, U.K., specializing in discretionary investment management for Institutional, Private Client and Trust clients. The Institutional business was focused on captive clients, and given my background in investment management for captives and private clients, he thought that William and I would have a lot to talk about!

Over coffee at Limegrove, William explained that London & Capital wanted to set up a corporate entity in Barbados, and get an office up and running to manage the relationships of their book of Caribbean-based corporate clients, with assets totaling just under US$1 billion at that time. There was a strong business case for doing this, not only to demonstrate to clients the highest level of commitment to the Caribbean region, but also to reduce the amount of management time spent and the expense of crossing and re-crossing the Atlantic several times a year. At this point, William had already spent some time searching for the right person to do this, and researching which jurisdiction to set up in.

William’s amiable approach masks a hugely successful business developer – in less than 10 years he built an asset management business of US$1 billion from absolute scratch. The majority of this business was located in the Caribbean jurisdictions of Barbados, Cayman and Bermuda and it made sense that London & Capital’s new Caribbean office would be located in one of those jurisdictions. He was looking for the right combination of people, resources, cost base and efficiency and he found it in Barbados. This is a huge vote of confidence in the domicile and the success of its International Business Sector.

As a result of this meeting (and a few more following!), London & Capital opened its Caribbean office here in Barbados in January 2016, almost exactly two years ago. Senior management at the company are more than pleased with how successfully the regional office has fulfilled its mandate of servicing its Caribbean clients, with almost full client retention and asset growth having been achieved in this period. Guy McGlashan, Chief Operating Officer of the parent company, says, “London & Capital is happy with its expansion into the Caribbean. We are committed to our client base in the region, and look forward to growing it significantly. Opening the office in Barbados has been a very successful move for the company.”

The entity is incorporated as an International Business Company (“IBC”), and as a result enjoys a sliding scale of corporation tax, starting at 2.5% and reducing to 0.25% on the highest income bracket. There is no capital gains tax in Barbados, and the company is 0-rated for VAT purposes, as are all international business companies. On initial set-up of the office, all furniture and equipment imported into the island were exempted from import duties, a significant saving. The company is exempt from foreign exchange controls, and financial records may be kept in a foreign (non-Barbados $) currency.

This success story is in no way unique. There are more than 3,000 licensed IBCs in Barbados, all with similar tales as to why they are located here. Barbados is also home to a number of other International Business entities, including captive insurance companies, trusts, international banks and societies with restricted liability. In 2016, legislation was passed to allow the creation of incorporated cell companies, while segregated cell companies have been around since 2001. With its extensive network of double taxation treaties, the international business sector in Barbados is quite unique in the Caribbean, driven as it is by bilateral agreements with major countries, rather than zero taxation.

Barbados has a well-educated workforce, and competitive pay grades. In the professional sector, lawyers and accountants are particularly strongly represented. These skill sets tend to lend themselves well to those needed in the international business sector. The big 4 accounting firms all have offices in Barbados, and the legal fraternity is very well represented with many experienced local partnerships and sole practitioners. In the captive space, many global risk managers and insurance brokers have offices in Barbados, and provide extensive captive management services.

Coupled with reliable telecommunications, a safe environment, good internal infrastructure and extensive airlift from major international airports in the US, Canada and the UK, the island is an attractive and efficient place to do business. Its natural beauty, tropical climate and dynamic restaurant and bar scene, adds positively to the mix.

On the negative side, there is no question that in recent years international business jurisdictions are being systematically targeted by larger developed countries and organizations. As these nations’ corporation and income tax revenues are being eroded, this activity will only intensify. The OECD’s initiative known as BEPS (Base Erosion and Profit Shifting) brings together over 100 countries to collaborate on anti-tax avoidance strategies, and the European Union Council list of non-cooperative jurisdictions are two examples of these actions.

Barbados, like all international business centres, has seen the effects of such actions over the years, and has seen the slowing of entity formations and growth in the sector as a result. However, international business remains the number two industry in the island, contributing tax revenues, employment, foreign exchange and significant support to the hotel and hospitality industries. It is of vital importance to the economic health of our island, and we need to remain fiercely protective of the business that exists here.

Lisl B. Lewis, B. Eng (Hons), FCA

Lisl is a chartered accountant with 25 years of experience in the financial services industry. She is London & Capital’s Executive Director – Head of Caribbean, with specific responsibility for relationship management and business development in the region. Lisl manages the Barbados office where she provides further support and expert services to London & Capital’s Caribbean clients. Lisl has held both Board and Senior Executive roles for multiple multinational organisations throughout the region, and has first-hand experience of the unique investment needs of captives, insurance managers and private clients. Lisl's career includes roles at Ernst & Young in London, Royal Bank of Canada, CXE International Bank, and Southwold Bank & Trust in Barbados. Most recently, she headed up her own specialist consulting business in Barbados, which included providing corporate directorships for captive insurers, international businesses and private banks.