Alternative asset fund to target investments in First Nations infrastructure projects

Hey there, time traveller!
This article was published 22/06/2023 (837 days ago), so information in it may no longer be current.

There is no denying progress has been made in economic reconciliation with Indigenous people in Canada but when it comes to deploying and managing capital, invariably many First Nations are at the mercy of their third party partners.

A new firm called Longhouse Capital Partners wants to change that.

It is a partnership between three First Nation men who each bring top notch expertise. One is a Wall Street/Bay Street veteran with $100 billion worth of deals under his belt, another is a lawyer with large scale west coast First Nations economic development management experience and the other is Manitoba’s own, Christian Sinclair whose resource project negotiation skills are becoming much in demand.

The three partners are currently in the process of raising $1 billion for an alternative asset fund that will target investments in First Nations infrastructure projects.

In addition to the technical financial management aspect the partners are committed to sharing their experience with Indigenous people to promote financial literacy and education through mentorship and actual internships.

Two of the Longhouse partners, Fred Di Blasio and Bernd Christmas, made up the senior management team at the $1.4 billion Nch’Kay Development Corporation, the economic development arm of the Squamish Nation.

Prior to that, Di Blasio had a long career in senior management with Canadian telcos and with a Wall Street investment bank.

He said, “Our partners have interviewed well over 1,000 people in finance and I’m the only Indigenous person we have come across.”

They have already built a team of professionals around them and a top-notch advisory council that includes former federal Justice Minister Martin Cauchon and former B.C. premier Christy Clark.

With First Nations settlement agreements in the hundreds of millions of dollars now not so uncommon — like the one that five First Nations in B.C. reached with provincial and federal governments for $800 million and 44,266 hectares of land earlier this year — the Longhouse partners want to be able to help those First Nations successfully deploy those pools of capital for the long term benefit for the communities.

Financial terms were not disclosed on the recent impact benefit agreement Sinclair negotiated between the small, impoverished Marcel Colomb First Nation and Alamos Gold Inc. on Alamos’s upcoming gold mine development near Lynn Lake, but it will be sizable enough to play a significant role in the band’s future financial well-being.

Sinclair said he has seen too many First Nations receive financial settlements and then are unable to take the right actions to allow those funds to grow.

“Too often I see bands receiving settlements and then those funds do not mature at the rate of inflation,” he said. “In many cases they lack the financial knowledge they need to grow those funds. Then as their populations rapidly grow and with inflation rising at the same time, they’re hit with a double whammy.”

Rather than see those dollars depreciating, Sinclair said bands need help with financial literacy so that those $50 million trust funds grow to $100 million in 10 years. It’s not to say current managers of trusts are doing a poor job, but many may lack the deep cultural empathy that Longhouse can bring.

Di Blasio said, “We want to deliver superior risk adjusted returns. That is what we do as financial stewards.”

Notwithstanding the conventional success the partners have experienced they do not intend to financial engineering as if it had nothing to do with Indigenous values or culture.

“I was fortunate. I got to study in the U.K. and it changed my view of the world,” said Di Blasio. “We want to be able to show our youngsters there can be exciting careers in finance and that you can do it living our values. Finance for good, if you will.”

They could not share details on the capital raise other than to say they are at the term sheet stage and that there are discussions with significant pension funds and banking institutions. There are also about 10 First Nations who will either invest in the fund or become partners in the firm.

They could not give specifics about projects they might invest in, but Di Blasio said it could take the form of equity stakes in new transmission lines that are built on traditional lands or in telecommunications infrastructure for First Nations who continue to be under served.

It’s an ambitious project but it could have the right mix of the right characters, good will and timing — and demand — to succeed.

martin.cash@freepress.mb.ca