The Emergence of New LP Categories
The Limited Partner (LP) base has grown exponentially in recent years, as more people become aware of alternative investments such as private equity and venture capital. That includes corporations, as well as charities and family offices, all of which are showing a greater interest in and commitment to the space. At its 2015 conference in Vancouver, the CVCA invited three different investment organizations to participate in a discussion about what’s attracting them to alternative investments today. Below is a summary of each company and some insights from their executives:
The Calgary Foundation is one of the largest of the approximately 190 community foundations in Canada, with about $800 million in assets under management. The foundation helps to support charities in areas such as arts and culture, the environment, health and education. About 30 per cent of its assets are dedicated to alternative investments, according to foundation Investment Committee Chair Bob Gibson. That’s split three ways: 10 per cent each in private equity, real estate and infrastructure. Gibson says the foundation seeks to generate returns of about 7-to-8 per cent annually. Each year, the fund sets aside 1 per cent for administration costs, 2 per cent for inflation, and 4 per cent in spending towards charities it supports. Gibson says the foundation is expected to focus some of its efforts on impact investing, which includes investments in areas such as alternative energy funds, social bonds or micro loans. “If they have a social good and they have a community component to them, we would take a look at it and potentially put money into it as an investment,” Gibson said.
Beedie Capital is the non-real estate investment arm of Beedie Group, which owns industrial and residential real estate in B.C. Its investment strategy reflects that of the Beedie Group, run by the Beedie family. The company recently partnered with hedge fund Bond Capital to help it expand the team and its investment targets, according to Beedie Capital Director David Bell. Bond Capital will manage an $85 million private equity fund, making it one of Canada’s largest merchant banks. Bell says there was an alignment in strategy and long-term focus between Beedie Capital and Bond Capital. He said Beedie Capital is 100 per cent allocated towards alternative investments, including both debt and equity products. “Allocation of asset class is less relevant,” Bell said. Being a family office also means the investments can be more fluid. “You are fortunate because you don’t have capital return requirements, so you can take a longer lens.” Bell said the target is a “reasonable,” investment time, with the ability to go longer if desired.
Intel Capital is a division of giant semiconductor chipmaker Intel Corp. It makes equity investments in innovative technology start-ups and companies worldwide through various funds. Intel Capital describes itself as being “stage agnostic,” and Director Harry Singh says the mandate goes well beyond chips that the parent company is known for. Intel Capital invests in range of technologies including hardware, software and services targeting enterprise, digital media, mobility, consumer Internet and semiconductor manufacturing. In 2014, Intel Capital made 125 investments, including 59 new investments and 66 follow-on investments. It invested more than US$359 million, including US$256 million in new investments. Singh says Intel Capital has made more than 30 investments in Canada over the years, including companies such as Blackberry and more recently makers of wearables such as Thalmic Labs and Recon Instruments, to name a few. Singh said the fund has investment committees that help to assess the various investment opportunities that come its way. Intel Capital has significantly boosted its international investing, from less than five per cent of its investment dollars in 1998 to nearly half in 2014. That includes companies in 57 countries on six continents.