This group of [Indigenous] investors is making major acquisitions in Canada. The results could benefit us all

Posted on August 10, 2024 in Debates

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TheStar.com – Business/Opinion
Aug. 10, 2024.   By David Olive, Star Business Columnist

Indigenous ownership in projects mitigates land-claims conflict, reduces regulatory risks for all investors, and creates other spinoff benefits.

Economic Indigenous reconciliation is becoming big business in Canada.

Indigenous Peoples are significant owners in critical economic sectors, notably energy, transportation and public works infrastructure and financial services. And they are investing at an accelerating pace.

In recent weeks, First Nations communities agreed to pay $1 billion for a stake in two major Western Canada pipeline systems operated by Calgary energy giant TC Energy.

TC Energy rival Enbridge, also based in Calgary, announced this week that it is seeking regulatory approval to sell a significant interest in its British Columbia natural gas pipeline system to Indigenous groups.

Enbridge is also partnering with six Indigenous groups to build a wind farm in southeast Saskatchewan that on completion in 2027 will deliver power to about 100,000 homes.

Enbridge earlier sold a 12 per cent interest in seven Alberta pipelines for $1.1 billion to a consortium of 23 First Nations and Métis communities.

And in preparing to auction its Trans Mountain pipeline, Ottawa has committed to a large Indigenous ownership component in the megaproject.

Early estimates put the Trans Mountain sale price at $30 billion. That will make Trans Mountain one of the world’s biggest Indigenous investments.

In recent years, Indigenous investors have made high-profile acquisitions across the country.

In 2021, a consortium of Mi’kmaq First Nations bought a 50 per cent stake in Nova Scotia’s Clearwater Seafoods, one of North America’s largest seafood providers.

In Ontario, Hydro One is negotiating a partnership with five local First Nations to jointly own the Chatham to Lakeshore Transmission Line. The new line will provide additional power to a fast-growing manufacturing and agri-food region.

In Alberta, six First Nations own an equity stake in the new $1.5-billion Cascade Power Plant, which will generate about 900 megawatts of electricity.

In Nunavut, the Kivalliq Hydro-Fibre Link project, wholly owned by Inuit investors, is a 1,200-kilometre power line that will connect Canada’s biggest territory to the Manitoba electric grid.

New Brunswick’s North Shore Mi’kmaq Tribal Council has an equity interest in a project to develop nuclear technology in partnership with Moltex Energy Canada and ARC Clean Technology.

And in B.C., the $95-million Tu Deh-Kah Geothermal project, which will generate up to 15 megawatts of clean power, is wholly owned by the Fort Nelson First Nation.

The governments that have launched loan guarantee programs to help finance Indigenous investing, including Ontario, Alberta and most recently B.C. earlier this year, see benefits in hastening the development of infrastructure projects that generate revenue and stimulate regional economic expansion.

Indigenous ownership in projects mitigates land-claims conflict, reduces regulatory risks for all investors, and creates spinoff economic benefits in the creation of Indigenous-owned supply chains.

Those big-ticket investments can belie the great amount of lower-profile Indigenous commercial activity across the country.

Fasken, a leading law firm with a large Indigenous commercial practice, reports that at least 111 Indigenous communities have obtained or announced equity stakes in Canadian businesses in the past two years alone.

Given recent expanded access to capital from governments and the private sector, Indigenous investors are increasingly ambitious.

“We expect to see strong continued growth in both the number and value of Indigenous equity investments across Canada,” Fasken says.

So far, those investments are concentrated in the West. About 57 per cent of the Indigenous investments that Fasken tracks are in the four western provinces, followed by Ontario and Quebec, with eight per cent and five per cent of the total, respectively.

And Indigenous investing is largely directed at energy projects. Wind power, oil and gas, solar generation and electricity transmission account for about three-quarters of the First Nations, Métis and Inuit investments that Fasken monitors.

The Indigenous financial sector is expanding, too, providing Indigenous investors access to a wider swath of the economy, including manufacturing, mining and real estate, including housing developments.

The more than 50 Indigenous lenders of the National Aboriginal Capital Corporations Association have provided about 50,000 loans totalling $3 billion to business enterprises owned by First Nations, Métis and Inuit people.

First Nations Bank of Canada (FNBC), based in Saskatoon and Canada’s largest Indigenous lender, is increasing its capital base to expand its $600-million loan book.

Until now, FNBC’s 18 branches in all three territories and five provinces have specialized in loans of $5 million or more, financing housing projects and medium-sized businesses.

The for-profit bank, whose stated mission is both to redress centuries-old injustices and pay dividends from the earnings it generates, is now hoping to tap the market for smaller loans, Bill Lomax, the bank’s CEO, told Bloomberg News.

The growing population of Indigenous entrepreneurs wants to build energy, housing and other infrastructure on traditional territory.

“We’re looking at a community,” Lomax says of his bank’s potential client base, “that is starting to skyrocket.”

That the land and its opportunities are gradually returning to Indigenous ownership is among the most promising developments in Canada’s reconciliation project.

https://www.thestar.com/business/opinion/this-group-of-investors-is-making-major-acquisitions-in-canada-the-results-could-benefit-us/article_93c98058-5402-11ef-a758-2ffdb540bbfb.html

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