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Hedge funds to set up shop in Halifax

Date: Wednesday, November 29, 2006
Author: Grant Surridge, Financial Post

They have referred to city 'as the next Dublin'.

Three of the world's biggest hedge fund administrators will soon call Halifax home.

Lured by an inexpensive, educated labour force, Citco Group Ltd., Bank of N.T. Butterfield & Sons Ltd. and Olympia Capital International announced plans this month to open offices in the city.

Government officials expect the companies to create nearly 1,000 high-paying jobs over the next seven years, stemming the flow of university graduates out of the province and turning Halifax into a financial-services hub.

The three Bermuda-based companies join West End Capital Management, which announced last year it will open an office in the Maritime city. And Stephen Lund, chief executive of the government agency responsible for wooing the firms, said there are more companies on the way.

"They've referred to Halifax as the next Dublin," he said of his contacts in Bermuda. "[Dublin] built its economy on [information technology] and financial services, and if you look at what we're doing here, it's almost the same thing."

The companies are attracted to Halifax because of the city's low cost of doing business and high concentration of universities churning out work-ready grads, said Mr. Lund, whose agency, Nova Scotia Business Inc., has also offered payroll incentives to the four companies that could total $17.6-million.

"My understanding is that the type of jobs these hedge funds are bringing here, a recent [chartered accountant] graduate would be a prime contender for these jobs," said Gordon Moore, president of the Institute of Chartered Accountants in Nova Scotia. "This will allow chartered accountants to find very well-paid work here."

Apart from its proximity and historical ties to Bermuda, the city's pool of educated workers makes Halifax a natural choice to locate to, said Frank Sebestyen, vice-president of fund services at Butterfield Bank in Bermuda.

"Eventually you get that critical mass to become a small financial centre, and I think that's where Halifax is headed," Mr. Sebestyen said. "It's not going to be Toronto, but it'll be a nice financial centre."

He said a model based on Dublin, which he calls "a hedge-fund service location," is realistic.

But a source working in the investment-management business in Halifax said not everyone is happy with the government subsidizing competition in the backyard. He added that tax dollars are being used to lure "accounting labour rather than any real intellectual brain power."

Mr. Lund said incentives are necessary for governments just to "get to the table" when attracting these companies. He said the jobs might even cause Nova Scotians to return to, rather than leave, the province for work.

"If people want to go and sew their oats, or want to go and take a job somewhere else to get some experience, then that's great. But it's nice when you want to come back to have an option to come back, and not wait until you are 65."