Nova scotia is open for business, and the welcome mat is being rolled out once again. The company getting the red carpet treatment this time is West End Capital Services (Halifax) Ltd., the services-provider arm of a Bermuda-based investment management firm.

The provincial government is heralding the year-old company’s expansion and putting money behind the trumpet call by offering a payroll rebate of up to $583,200 for the creation of up to 50 new, full-time positions. And for its part, West End Capital, which created 19 such positions in 2005, is looking back on a year of tremendous growth in the province — but making no promises for what lies ahead.

“It’s hard to predict the future,” says Rebecca Gasek, legal counsel for West End Capital Services. “We have no firm plans to expand, but will continue to grow as the [parent] Bermuda company grows.”

So far, business is good. The parent company, West End Capital Management Ltd. , opened its doors in 1998. The firm, which now has about $1 billion in assets under management, specializes in relative value, market neutral and directional trading strategies in the global fixed-income markets. It may also have close ties to billionaire investor Warren Buffett.

According to published reports, Value Capital LP is a $570-million hedge fund backed by Buffett. Value Capital was founded by Mark Byrne. And West End Capital Management, Byrne’s fund-management company in Bermuda, opened Value Capital to outside investors in 2004, raising about $300 million. Berkshire Hathaway Inc., of which Buffett is chair and CEO, withdrew about $125 million from the fund, reducing its stake to 62% from 90% on June 30, 2004, according to a U.S. Securities and Exchange Commission filing last March.

In January 2005, West End Capital Management, which now has 50 employees, opened an office in Halifax to provide legal, accounting and software support. Within a year, the office had 19 people on staff and the warm embrace of the provincial government. (If the Buffett link is accurate, it would go a long way to explaining the open-arms approach of the provincial government and its reticence to speak with Investment Executive.)

Halifax was selected as the site for the new office for two main reasons. First, it is a challenge — surprisingly — to staff positions in the Island of Bermuda. “I was absolutely blown away when [the executive] told me it was impossible to get people to come to Bermuda,” says Gasek, a native of Truro, N.S.

The high cost of living on the islands and the daunting immigration laws combine to deter many would-be employees. On the flip side — and equally surprising — is the close and long-standing relationship enjoyed by Nova Scotia’s capital city and the tiny Caribbean country. So West End Capital’s expansion to Halifax “builds on the centuries-old tradition of trade, partnerships and goodwill that has existed between Bermuda and Nova Scotia,” says Economic Development Minister Ernie Fage.

His sentiments are echoed by Patrick Boisvert, chief financial officer of West End Capital Management. “By choosing to further tap into the ties between Bermuda and the province,” he notes, “West End will help drive growth.”

So when it became apparent that expansion meant opening up an office in another city, in another country, there was only one location on the list. And that location, interestingly, is not part of West End Capital Management’s international marketplace. “The hedge funds are completely supporting non-U.S. residents or tax-exempt residents,” says Gasek. “None of the investment services are provided from Canada.”

But there are advantages to working from Halifax. Although the two offices are countries apart, they are still in the same time zone. In addition, it’s only a two-hour flight from Nova Scotia to Bermuda. And in this technological age, the modern machinery of the workplace — which includes video conferencing, a single bi-country phone system and shared computer network — can give employees instant access to one other and to company information.

“It makes for a seamless business relationship,” says Gasek.

It also makes for good business. One of the selling features of Nova Scotia is its intellectual capital. Halifax, Nova Scotia’s largest city, is home to six degree-granting universities and more than 30,000 students.

It also has the highest proportion of graduates from post-secondary institutions in all of Canada.

@page_break@Gasek, a graduate of the University of New Brunswick’s law school, notes that the company has already had preliminary discussions with Dalhousie University about West End Capital offering intern positions down the road.

“By strategically locating its growth in Nova Scotia and taking advantage of the highly educated provincial workforce, West End Capital will be able to increase its overall operations,” says Brent Slade, the company’s director of business and product development.

Still, there are other advantages to doing business in Halifax. According to KPMG LLP’s 2004 Competitive Alternatives report — which compared business costs in 121 cities in North America, Europe, and Asia-Pacific — Halifax ranks first among North American mid-sized cities in overall cost competitiveness.

To top it off, the government is also prepared to sweeten the deal for many companies, including West End Capital Services. Through Nova Scotia Business Inc., the investment attraction arm of the province, the new company can receive the payroll rebate mentioned earlier. This earned rebate will be paid out annually over three years once the jobs have been created.

According to NSBI, the province’s payroll rebate is a performance-based incentive offered to eligible companies expanding or locating in Nova Scotia. To receive a rebate, eligible companies must create a specified number of new jobs at determined salaries within a set timeframe. The jobs must be maintained to the end of the rebate period. The rebate is usually payable annually over a term not exceeding six years.

To be eligible, companies need to be profitable with a proven track record and strong management; must have reasonable prospects for continued growth and success; should create sustainable long-term jobs; and should create at least 50 new full-time jobs.

“The payroll rebate is an incentive to grow and continue growing,” says Gasek.

To the best of Gasek’s knowledge, West End Capital’s business model is unique in Halifax. “It’s an interesting idea and fascinating to watch this unroll,” she says. IE