Why We Are Here

INTERNATIONAL BUSINESS Why we are here

Three local business leaders explain the benefits of being based in Bermuda

BACARDI

“As I travel around the world, many people are surprised to learn that Bacardi is headquartered in Bermuda,” says Mahesh Madhavan, CEO of Bacardi Limited, the largest privately held spirits company in the world. “We’ve actually been here since 1963, and have enjoyed the feeling of security, safety and wellbeing that the Island provides.”

Bacardi was founded in Cuba in 1862. However, the Cuban assets of the business were seized in 1960 during the Communist revolution, and the family fled the island, ultimately creating its worldwide headquarters in Bermuda in 1965.

“The company fled Cuba in exile, and had to rebuild the business with all we had at that time – the Bacardi trademark and our secret rum recipes.”

“I believe the reason for wanting to stay in a country like Bermuda is because of the political stability and sense of safety – that what happened because of the Cuban revolution, can never be allowed to happen again to the family and our company. In addition, the business environment and leading edge communications, financial and technology infrastructure help to support our global business”.

During the early days of rebuilding the brand, Bacardi’s primary markets were the United States and Latin America, and Bermuda provided excellent travel links to those countries, explains Madhavan. “When we acquired Martini in 1992, we gained greater access to the European market, and Bermuda has direct flights to London, which is good, although we would like to see more frequent flights to Europe. Later in the 1990s, we started to establish our footprint across Asia and farther afield, and now our business is truly global, with consumers enjoying our premium spirits brands in 170 countries around the world. If one has to travel from Bermuda to far eastern parts of Asia, it’s a little tricky, but, if we were headquartered in another location, even places like London or Singapore, there would still be certain countries that would always be difficult to reach and require several flights across different time zones.”

Most of Bacardi’s senior management team is located in Bermuda, says Madhavan. “We consider this our home, and our senior leaders operate from here, demonstrating their commitment both to our business and the Island.”

Madhavan points out that, there’s a wealth of great talent available on the Island, especially in the financial and legal areas due to the large insurance business that’s based here. Also, unsurprisingly, talented staff are happy to relocate to

Bermuda. “Our office does attract top talent. We have many examples of highly qualified managers joining us here in Bermuda from another Bacardi office, gaining experience to further their career, and then stepping up to an even higher leadership role elsewhere around the world with the firm. ”

Due to the global nature of the Bacardi business, Madhavan says that there’s a lot of travel involved in his position, but he always looks forward to returning to the island. “It’s always nice to come home. I was recently on the road visiting several different markets, and when I landed back here I felt a sense of coming back to a place that I can call home.”

“The other thing I should mention is that many Bacardi folks from around the world come to Bermuda for meetings on a regular basis, and I would say that it begins to feel a little bit like home for them too. Before coming to Bermuda as CEO, I was based in Geneva and was a frequent visitor to the island, and I know this was true for me.”

Over the years, Bacardi has grown from being a single-brand company to owning a huge multiple category portfolio. “We are making a particular effort to communicate the depth and breadth of our iconic premium portfolio in Bermuda. The team that work in our headquarters are all brand ambassadors, and, when we go to a restaurant or bar, we make a point of making people aware of our portfolio. When you say ‘Bacardi’ most people think about Bacardi rum and little do they realise we also own Grey Goose vodka, Bombay gin, Dewar’s Scotch whiskey, Martini vermouth and sparkling wine, Patrón tequila, and many other brands. We want to let both the trade and consumers in our home town know about the evolution of our company over the years.”

Indeed, quite an evolution and success story it has been, too. From the adversity faced in the 1960s, the family-owned company that occupies the flagship building on Pitts Bay Road, now employs more than 7,000 people, including a staff of 80 in Bermuda, and its brands are available in more than 170 countries.

As Madhavan shared, “Bacardi is 156 years old, but our future has never been brighter.”

JARDINE MATHESON

It was founded by two Scotsmen in 1832 and trades primarily in Asia, but, as a group, Jardine Matheson loves having its corporate headquarters in Bermuda.

The lifestyle, the infrastructure, the stable political system, and the regulatory regime make it almost a home from home for a company that relocated here from Hong Kong about 30 years ago.

Philip Barnes, president of Jardine Matheson International Services Ltd, says, “We are a global organisation with businesses all over the world, and, when we established ourselves here in Bermuda, it was at a time when Hong Kong, which was the previous domicile of the group, was in the process of being handed back to China.”

“One of the underlying principles of the way the group does business is under the UK legal system. The group was looking for a location that encompassed the UK legal system as well as having the additional benefits of a strong international reputation as far as regulations and government. It looked at several locations, and Bermuda was a clear favourite in terms of what was here.”

“The way Jardines has conducted business has always been under the UK system. In Hong Kong, a former UK dependent territory, the British system worked well for the group, so it wanted to continue doing it that way. The right of appeal to the Privy Council was also important.”

Barnes says Jardines is headquartered in Bermuda, although most of the businesses are elsewhere – primarily Asia – and are regulated where they are domiciled. “But, in terms of the ultimate holding company, which is in Bermuda, the financial rules and regulations and the accessibility of accounting and legal talent made it easy to stay here.”

The talent pool in Bermuda is excellent, he says. “Most of the functions are done in-house, with a 100 per cent Bermudian staff. There is a pool of established and good talent locally, and when the firm needs external advice there is a great selection of law firms and accounting firms.”

Fidelity’s Country Head and Group Head of Tax, Allan Pelvang, who is based in Bermuda in an office on a peaceful part of the waterfront in the capital of Hamilton, says: “I am a great fan of Bermuda.

“There is a combination of a welldeveloped financial services sector with a great quality of people, strong regulation and a level of work that is on a par with what we would see if we were working in London or New York.

“We also have an amazing lifestyle, which is not to be sniffed at. It is not for everyone, but what I love is that you can get on your moped, go to work then jump on your moped again and go and play tennis or golf or take the boat out.

In terms of business regulations, Barnes adds, “We have a very close relationship with the Bermuda Monetary Authority, which has improved standards and quality of its regulations. It has had to up its game and has done so.”

As everyone knows, Bermuda is a tiny spec almost in the middle of the Atlantic, but Barnes sees no problem with its geographic location. “You would think it would be counterproductive to have an office on the other side of the world to where the main businesses are, but today it makes no difference with technology.”

“Our board travels extensively and holds its AGM as well as other meetings here. With air travel and the Internet, it is very easy. And the infrastructure is good enough. We have a choice of ISPs, and all of them seem to compete. We have no problems at all.”

He says political stability was a key element of being in Bermuda, adding, “There has been several changes in government, and, from Jardine’s perspective, they have all been completely seamless. Governments are very receptive to us, which we appreciate.”

Life in “paradise” also has its attraction. “It is not difficult to attract the right person to come and live here. For me it is a five-minute drive to the office. In London, it would be an hour, and there is an awful lot to do in Bermuda.”

“I am not sure where else in the world you can get that combination of firstclass financial services work and the quality of life.”

Fidelity was one of the first international firms to domicile in Bermuda, which it did in 1969.

A Danish national, Mr. Pelvang has also worked with Fidelity in London and Luxembourg, and he says: “Fidelity remains very committed. I am not here for the short term, but it is, of course, difficult to predict precisely what the future will bring.”

He believes Bermuda’s geographical location is a good feature. “It creates a point between our US shareholders and shareholders in Europe and Asia. Logistically, it is good.”

He also believes that there is a good pool of talent available locally. “Going back six or eight years, during the recession, it was more difficult to get qualified candidates for positions, especially Bermudians. But that has improved lately.”

He added: “We always run into the perception locally that we would rather employ expatriates, but for the vast majority of our positions we would much rather have Bermudian staff.

“Other people stay two to four years and move on and that is generally bad for business.”

It is clear that Bermuda has been faced with some critical issues—for example, the emergence of gang-related crime— and the occasional local issue that may not always have been conducive to the stability that businesses crave.

Mr. Pelvang added: “I think that generally as a business we are encouraged by stability. We are therefore always encouraged when we see moderate behaviour and rhetoric, in particular, in politics.

“We do like to see continued strong policies to deal with crime. We are encouraged to see that steps are being taken to deal with gangs and gun violence because of the more recent incidents.”

Like other countries around the world, Bermuda did not escape the effects of the worst recession in living memory. But Mr. Pelvang adds: “It is encouraging to see Bermuda emerging from the recession and businesses growing again.”