STERLING Asset Management is launching an investment vehicle specialising in the private equity and real estate development sectors.
The company, which has yet to be named, will cater to customers who want investments that have the potential to earn above forecast levels, known as "upside risk".
"We have observed the emergence of a strong demand for equity investors who are seeking to maximise upside risks that exist in the local and regional economies," said Charles Ross, Sterling's president and chief executive officer.
Many investors are seeking these opportunities because of the low returns on fixed-income instruments due to low interest rates.
The company plans to invest in financial instruments, such as fixed-income and equity securities, that are traded on global capital markets. It noted that many assets are at or below book value at present.
"This presents opportunities for the prudent investor to capture undervalued creditworthy instruments at attractive yields with strong potential for a rise in value," Sterling says in a draft indicative fact sheet.
It will take advantage of opportunities in high-growth businesses and projects in the real sector (as opposed to the financial sector).
The new company will also put money into real estate, most of it residential, though Ross is ruling nothing out.
Its parent company has been involved in real estate development in St Kitts and Nevis, where it provides financial management and funding.
The new investment company will initially be financed through a private placement next month and will then seek a listing on the Jamaica Stock Exchange.
Sterling provides medium- to long-term financial advice and instruments in US and other world market currencies to the corporate, individual and institutional investor.
"We have the experience to deliver high returns over long periods," Ross said after the company's annual investor briefing on Thursday. Sterling has generated an annual return on equity of more than 35 per cent since it was founded 11 years ago.
The guest speaker at the briefing, Jonathan Blue, chairman and managing director of Blue Equity, which owns Shell service stations on the island, said that the focus of private equity investors has shifted to emerging markets including the Caribbean.
Blue Equity ventured into the region last year when it acquired Cool Petroleum Limited, now the Antilles Group, the licensed operator of Shell brands in Jamaica.
The close links, geographically and historically, between countries in the region are among the reasons Blue is eyeing it for investment. The Caribbean also has a climate that is good for machinery, so they last a long time.