A group of Indigenous business veterans has launched an alternative asset manager with a $1-billion target for their first fund.
Vancouver-based Longhouse Capital Partners Inc. was established this spring to collaborate with First Nations on both investments and training the next generation of business leaders. The founders of the Indigenous-run firm are also drawing on a former provincial premier and federal cabinet minister to advise on investing in private debt, infrastructure and real-estate assets.
Longhouse is led by co-founder and chief executive officer Fred Di Blasio, a member of the Huron-Wendat Nation and former executive at Nch’Kay Development Corp. Mr. Di Blasio’s responsibilities at the Squamish Nation-owned company included launching the 6,000-unit Senákw condo development in Vancouver – one of the country’s largest Indigenous-owned projects, supported by a federal $1.4-billion loan – in partnership with developer Westbank Corp. He was previously a business development executive at Telus Corp. T-T and AT&T Inc. T-N.
“Longhouse was created to generate superior risk adjusted returns for investors, while having a lasting positive impact on Indigenous communities as owners,” Mr. Di Blasio said in an interview.
He said recent government policies and court decisions are transferring significant wealth to Indigenous groups – money that needs to be managed for future generations: “We will take our rightful seat at the table to ensure our values are adhered to and our culture is preserved, while delivering on economic independence as full-fledged partners and owners.”
Longhouse’s Indigenous partners include lawyer Bernd Christmas, who is former CEO of Nch’Kay Development, and Christian Sinclair, former Oniknew (chief) of the Opaskwayak Cree Nation in Manitoba and a construction industry executive. The fund also plans to offer Indigenous groups opportunities to invest alongside major pension plans, insurers and other institutional investors.
Longhouse will look for investment opportunities in both Indigenous projects and traditional private equity markets. Several private sector utilities, such as Montreal-based Innergex Renewable Energy Inc. INE-T and Ontario’s Hydro One Ltd. H-T, have given equity stakes in infrastructure projects to Indigenous groups as part of their strategy to gain social license for developments and further reconciliation. Longhouse is already serving as an adviser on similar partnerships.
As an investor, the fund manager plans to back businesses or projects with $500-million to $1.5-billion in revenues, and $50-million to $150-million of earnings before interest, taxes, depreciation and amortization. Its investment criteria and fee structure are similar to established private-equity shops.
The potential market for Indigenous property, infrastructure and private debt investments is enormous. A recent study sponsored by the Assembly of First Nations and Indigenous Services Canada, a federal government agency, found decades of underfunding have led to massive gaps between services in Indigenous communities and the rest of the country.
The AFN study found it would cost $5.2-billion to bring wireless and internet connectivity in mainly rural Indigenous homes to urban standards. It said it will cost $12.7-billion to fund Indigenous net-zero emissions initiatives and identified a $59-billion shortfall on infrastructure investment. Every dollar of spending on Indigenous infrastructure generated between $2.46 and $3.83 of benefits for the entire economy, the study found.
Longhouse’s community commitment includes a “5-5-5 pledge,” which sees 5 per cent of founders’ shares and 5 per cent of the fund manager’s carried interest in its investments gifted to First Nations, while 5 per cent of employee’s time will be used for internships and mentorship programs to build financial skills capacity for Indigenous youth. This program will grow as additional First Nation and umbrella organizations join Longhouse as partners.
Longhouse’s team includes Paul Cugno, a co-founder and leveraged finance debt specialist who worked at Wall Street investment banks Jefferies LLC, Barclays PLC and Lehman Brothers; and Kelly Marshall, a real-estate financer who chairs Granite Real Estate Investment Trust and who worked at pension plan OMERS and Brookfield Asset Management Inc.
“Private credit is a significant alternative asset class, generating income greater than 10 per cent” annually, Mr. Cugno said. He added that the global figure of such assets is “approaching US$1.4-trillion today and expected to grow to US$2.6-trillion by 2026 to meet borrower demand.”
Yanick Blanchard, former global head of corporate and investment banking at National Bank of Canada, joined Longhouse recently to expand the team’s footprint in Quebec.
“The need for trusted partners and creative financing solutions are significant to meet the needs of the First Nations and Canadians,” Mr. Blanchard said of the infrastructure and real-estate sectors.
The fund manager’s advisory board features former B.C. premier Christy Clark, now at law firm Bennett Jones LLP; former federal justice minister Martin Cauchon; and Walt Jackson, who ran private credit funds at Onex Credit, and led credit teams at Goldman Sachs Group Inc. and Bank of Nova Scotia.
Aside from Longhouse, there are other Indigenous-owned private equity funds, including Vancouver-based Ki’mola Indigenous Capital, which was founded in 2017. However, Ki’mola outsources many of its investment decisions to third-party fund manager Terra Genex Inc., while Longhouse will make its investment decisions in-house.