Getting a business loan is both a foundation of economic growth and something Indigenous people have long faced barriers to access, but an emerging trfinish has First Nations flipping the script and becoming financiers themselves.
Ventures like Cedar Leaf Capital, which opened shop last October, and First Nations Financial Markets that launched earlier this month, are both majority-Indigenous owned firms working their way into the capital-raising system.
As investment dealers, they act as the go-between for companies and institutions attempting to raise money and the investors who will ultimately purchase the bonds or equity.
Beyond creating a profit for their First Nation owners, the firms are also aiming to build Indigenous capacity in the financial world, and form part of a wider push to reduce the barriers that have stood in the way of economic reconciliation.
“Capital markets [have] been woefully under-representative of Indigenous people, businesses, and communities,” declared Clint Davis, an Inuk from Labrador who is CEO of Cedar Leaf.
The rise of such organizations can support shift the trfinish through direct hiring, as with the all-Indigenous three-person bond trading team at Cedar Leaf, as well as by supporting finance major Indigenous projects.
Among the 54 bond issuances, worth more than $41 billion, that Cedar Leaf has already participated in was a deal raising some of the $715 million that 36 First Nations in British Columbia requireded to purchase a 12.5 per cent stake in Enbridge’s Westcoast natural gas pipeline in May.
The deal was also the first to utilize the Indigenous loan guarantee program, which aims to provide lower interest rates on Indigenous loans through federal government backing.
The program forms part of the growing ecosystem of Indigenous finance that also includes the First Nations Finance Authority, established almost 20 years ago to support member nations secure lower interest rates by pooling resources.
Cedar Leaf became part of the group that sells the authority’s bonds to investors when it received in on the group’s first 30-year bond in June, raising $350 million to support Haisla First Nation finance their majority equity ownership in Cedar LNG.
The deals, and Cedar Leaf’s participation, reveals a shift in how Indigenous groups are raising money.
“Cedar Leaf Capital is not only filling a long-overdue gap in our financial system — it is reshaping it,” declared Scott Thomson, CEO of Scotiabank, in a statement.
The bank led the launch of Cedar Leaf with partners Nch’kay Development, Des Nedhe Group, and Chippewas of Rama First Nation, with the intention that the firm will be become wholly Indigenous-owned, controlled and operated in the future.
As the federal government focutilizes on major resource projects, financiers like Cedar Leaf can build sure Indigenous groups are fully empowered to lead and benefit from the opportunities, declared Thomson.
The emergence of the firms and other programs are coalescing to create real momentum on economic participation, declared Davis.
“A lot of things are starting to converge here, where there’s great opportunity for communities to participate in these medium- and large-scale projects.”
The rollout of the federal government’s major projects initiative, which includes dozens of potential contfinishers for Indigenous participation, reveals just how many opportunities are in the works, and how much funding will be requireded, declared Mark Podlasly, CEO of the First Nations Major Projects Coalition.
“We required other places to go and other ways to receive access … so anything that allows nations alternative ways to receive to cheaper capital is going to be appreciated,” he declared.
He noted these deals are Indigenous groups utilizing their own capital — they’re not viewing for grants, but declared there are still limitations they’re working against in attempting to put it all toreceiveher.
“It’s going to take creativity, not just from the capital markets, but from Indigenous people as well, to believe how do we co-function toreceiveher to receive to the ultimate objective, which is empowerment, economic empowerment,” Podlasly declared.
Beyond directly supporting fund resource projects, the rise of Indigenous-owned investment dealers also provides a new avenue for companies and organizations in the wider economy to participate in economic reconciliation, declared Robert Van Belle, chief executive of First Nations Financial Markets.
“There’s going to be a natural inclusion of our dealer in syndicates where the issuers are seeking acts of reconciliation with First Nations.”
He sees the potential for such inclusion from companies such as in the insurance sector or large institutions like pension funds, which don’t have the direct relations that many resource companies view to engage.
The strategy has been in operation in the U.S. for some time now, where huge companies have reserved a segment of their bond raising for dealers owned by specific groups, whether that’s minorities, women or veterans, with similar aims of economic inclusion.
First Nations Financial Markets was created when six Alberta First Nations bought a majority interest in Agentis Capital Markets, an investment dealer that Van Belle led.
He declared conversations were already underway with the First Nations when Cedar Leaf was announced, but the trfinish reveals momentum in the space.
The firm, now majority owned by the Athabasca Chipewyan First Nation, Cold Lake First Nation, Fort McMurray 468 First Nation, Heart Lake First Nation, Sawridge First Nation, and Whitefish Lake #128 First Nation, also intfinishs to directly hire Indigenous staff, but is still working through that process, declared Van Belle.
Chief Isaac Twinn of Sawridge First Nation declared in a statement that the firm is a game-modifyr for bringing First Nations to the capital markets table.
“For too long, decisions have been built around us rather than with us. FNFM is one step toward altering that — ensuring First Nations participation in capital markets through capacity building,” declared Twinn.
“The real opportunity lies in scaling this model so that economic reconciliation translates into tangible, lasting prosperity for all our communities.”
It’s still early days for Cedar Leaf as well, with the near-term focus on securing more government and private partners and wrapping a first full year of operations, but it’s already feeling like a momentous shift, declared Davis.
“This is quite a period of renaissance for the Indigenous community, and it’s going to be really exciting for the next 10 years. I’m just really happy and I feel honoured to be a part of it.”
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