Bonds could help repatriate B.C. investment capital

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In times of crisis, people crave an opportunity to do their part. That desire to pitch in for the better has been key in B.C. as folks effectively pull together while remaining socially distant and employing other preventive safety practices. Thanks to our shared efforts, we’re already ahead of others in starting our economic recovery.

But there is much more to do. Many jobs will not come back. Whole industries may not recover. Spooked by the prospect of a long-term slump and mounting debt, institutions may become reluctant to lend and that would leave small businesses struggling to deliver the services our communities depend on. We need to build back and build back better to prepare for a prolonged pandemic slowdown and the many challenges to come.

Our governments are leading with urgent economic support, but maybe there’s a way we can all help out directly with our investments. How about a build back better bond? 

Bond issues to finance important efforts are an old idea, one that’s helped us build back after tragedies before. In recent years the idea has been floated to finance the transition to a low-carbon economy and in the last few months the City of Toronto raised $100 million for a social bond that will provide capital for housing projects and social infrastructure. Here in B.C., QuadReal just closed a $350 million inaugural green bond. What about a bond that allows citizens to put their money to work in the communities where they live?

Out of the roughly 517,000 businesses in B.C., 98% are privately owned. This presents a large untapped investment opportunity, particularly when factoring in business succession planning, where it is predicted that 75% of owners are considering retirement before 2030.

Many jurisdictions around the globe already have investment vehicles to tap into these opportunities, but we currently lack a provincially driven private equity investment model at this scale. 

We need something that meets the needs of our local investors, community foundations, university endowments, regional trusts, public pensions and municipal reserves – one that would allow investors to move a percentage of capital back into our province and away from the public markets outside of Canada.

This could solve several problems. It would provide much needed investment in local non-publicly traded businesses, across a variety of sectors, helping them expand despite the crisis. It would also create more portfolio resilience by allowing investors to back a greater range of assets that happen to be in their community or province.

For example, such an investment vehicle would mean endowments regardless of size could have more than just grant impact in our communities. Individuals would know that a percentage their investments are positively affecting our province. Reserves could be used locally, and pensions could help create further indirect value for pension contributors.

Such a fund would have a profound influence on our province, including reducing the government need to acquire additional debt. It would also allow quickly growing private companies in British Columbia to stay local rather than sell off their talent, innovation and intellectual property. 

This pandemic has opened space to offer our tri-sector leaders a once-in-a-generation opportunity to bring our investment capital home. 

Glen Lougheed is a tech entrepreneur, investor and political adviser. Peter Elkins is a serial entrepreneur and community economic development thought leader.