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Jim Kinnear (Anthony Jenkins/The Globe and Mail)
Jim Kinnear (Anthony Jenkins/The Globe and Mail)

The Lunch

Jim Kinnear: A taste for the new, with a finger on reset Add to ...

On his way to lunch at a favourite Bay Street eatery, Calgary financier Jim Kinnear ran into an old nemesis, the man who, with a flick of a pen, had cost him and his investors many millions of dollars in lost value.

But Mr. Kinnear insists he harbours no hard feelings toward Finance Minister Jim Flaherty, who 4½ years ago snuffed out the income-trust financing model that made Mr. Kinnear's Pengrowth Energy Trust a darling for yield-hungry investors.

Back then, Mr. Kinnear helped lead the oil-patch resistance to Mr. Flaherty's Halloween Massacre, but "we're beyond that now," he insisted over the din of lunchtime chatter at Jump restaurant, a bright and busy bistro on the ground floor of a Toronto bank tower.

That day's chance encounter with Mr. Flaherty came just a month after the income trusts' tax advantages were finally phased out - but Mr. Kinnear did not come to lunch to lament the end of his meal ticket.

He wanted to talk about his continuing passions - golf, philanthropy and Kinnear Financial Ltd., a 30-year-old company he dusted off as his new vehicle to fill the high-yield, energy financing vacuum left by the death of the trusts. He is promoting an instrument called an overriding royalty interest which mimics some of the income trust's advantages for investors in energy production.

He has done one $100-million deal in exchange for a 5-per-cent cut of production from Calgary's Compton Petroleum Corp. He has also invested in an offshore gas field in Vietnam which is, he believes, the seed of a global energy royalty fund to complement his Canadian activity.

He concedes the jury is still out on his royalty venture - right now, it is one of a number of energy financing alternatives. But it was the same thing when he helped develop energy trusts in the 1990s. "When we started the trust business, we were pioneers. Ten years later, everybody was doing it."

Under his guidance, Pengrowth averaged a 14-per-cent compound return on investment over 20 years. After Mr. Flaherty's lightning strike, Pengrowth, like many trusts, was converted to a taxable corporation. Having retired from the company in 2009, Mr. Kinnear has reduced his shareholdings to divert more cash and attention to Kinnear Financial.

While it might seem like a jarring transition, such moves are typical of Mr. Kinnear, 63, whose career is notable for his knack for financial innovation - he proudly calls himself a financial engineer - and for his ability to keep reinventing himself.

Born in Toronto, he grew up in Montreal and Burlington, Ont., and worked in the securities business in London and Montreal. In 1980, as Quebec writhed in political and economic upheaval, he struck out for Calgary with a rental truck full of his worldly possessions and $200 in his pocket.

He hung out his shingle as a financial consultant in the oil patch, but business dried up in the 1980s downturn. He formed Pengrowth just to keep busy, using it as a vehicle for pension fund investment in the energy sector. In the 1990s it emerged as an early energy trust, buying mature assets from major oil companies, improving their productivity and distributing cash flow to investors.

Pengrowth gained a big public profile, especially as one of the saviours of the Calgary Flames hockey team, serving for 10 years as naming sponsor of the Saddledome arena. The intensely sociable Mr. Kinnear put himself forward as a community builder and a widely networked business connector with ties across Canada. "I seem to meet a lot of people one way or another," he says.

He still gives one of the most lavish Stampede parties, in the backyard of his mansion in plush Mount Royal. He gave $10-million seed money for the new $100-million Kinnear Centre for Creativity and Innovation, which is part of the Banff Centre. He supports East Coast university scholarships and charity golf tournaments for a Calgary hospital.

In his new incarnation, Mr. Kinnear has added international offices in New York and London - and he expects to spend a lot of his time in London where he can easily bridge the global time zones among Africa, Asia and North America.

But he is convinced Canada is the place to be for private energy investors over the next few decades. "Eighty per cent of the world's oil is controlled by national companies. There aren't that many places in the world where you can invest in reserves.

"If you accept in the long run that oil and gas is a good focus for investing, we are in a very good position globally."

With much of his business involving globe-trotting, he can work in some golf. Mr. Kinnear plays a lot, although not as well as he would like, sporting a handicap of 10 or 11. "I need practice on my short game, chipping and putting," he says, sounding like any weekend hacker.

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