Atlantic Canada’s newly energized financial services sector is continuing to grow, with the expansion of a major international hedge fund operator in Nova Scotia and the arrival of a new information-technology support firm in Prince Edward Island.

Several factors appear to be driving the trend, including rich government incentives and attractive salary levels. In addition, word is spreading among international companies, notably those based in Bermuda, that Atlantic Canada is an overlooked business opportunity.

The most dramatic growth is occurring in Nova Scotia. In the 18 months since the province’s business-development agency, Nova Scotia Business Inc. , first announced that three Bermuda-based hedge fund companies would be opening offices in Halifax — Citco Fund Services, Olympia Capital (Bermuda) Ltd. and Butterfield Fund Services (Bermuda) Ltd. — at least two more global companies, Flagstone Management Services (Halifax) Ltd. and Marsh Captive Solutions Group, both Bermuda-based insurers, have set up shop in Halifax. And now Citco is expanding its operations in Halifax.

There are three key reasons why Citco, the leading global provider of administrative services to the hedge fund industry, chose Halifax for its new technology-development office, which will employ up to 325 people over the next six years. The practical reason: “We already have a front services division office in Halifax,” says Ben Jansen, president of Citco Technology Management Inc. in Fort Lauderdale, Fla. “Halifax was already on the radar screen.”

Also, the provincial government has rolled out a large welcome mat for Citco. The hospitality started in New York, when Nova Scotia Premier Rodney MacDonald and representatives from NSBI met face to face with Citco and, subsequently, held a press conference there to make the official announcement.

“They were very professional and very helpful,” says Jansen.

That approach is something that sets Nova Scotia apart from its competitors, says Stephen Lund, NSBI’s president and CEO. Many foreign companies, he says, do not think of Halifax when they consider expansion. Often, they are even unclear about its location.

The third reason is the significant incentives the province coughed up to win Citco’s expanding business: $1.5 million to support start-up costs and training, as well as a payroll rebate worth as much as $7 million over six years.

Although incentives are necessary, they are not deal-makers, says Lund: “Every jurisdiction offers some form of incentive, but we never win business on this. [However], if we don’t offer it, we’re not in the game.”

Jansen agrees. “Let’s be honest,” he says, “it is a lot of money.” However, he adds, “The incentives are not the only driver. It has to do with the quality of a society and the quality of the people.”

Part of that quality is reflected in the education and expertise of local residents. Access to a trained talent pool is a big draw for companies in an era in which competition to attract and retain employees at competitive rates remains fierce. This was one of the major draws for Data Shapers Inc. , an infotech provider for the financial services industry headquartered in Calgary that soon will be opening an office in Charlottetown.

Data Shapers’ executive vice president and co-founder, Rick Mills, is impressed by the graduates of educational institutions such as Holland College and the University of Prince Edward Island.

This, coupled with a receptive business environment, made P.E.I. the logical choice for the new expansion, he says, which is expected to create 11 new positions within the first year of operations and more than 30 positions within three years.

NSBI’s Lund sees the latest growth in Nova Scotia’s financial services sector as the start of what he calls “Phase 2.” For newly arrived companies having set up shop in the province recently, it is logical for them to begin to expand there. Phase 3 involves attracting other types of companies and professionals that specialize in supporting the financial services sector, such as IT operations.

There are inklings of that future growth already. Keane Canada Inc. , which provides training and recruitment programs for financial services companies, among other business activities, recently unveiled plans to expand its existing operations in Halifax and create up to 375 new jobs within the next five years.

Ultimately, says Lund, success leads to success: “We do a good job with companies. We work with them to make sure they’re going to be successful.” IE

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