Eve, it's great to have you here. The FNFA and
the FNFMB are at the forefront of a new wave
of Indigenous institutional investing. And I
think it's really changing how funding is coming
to Indigenous communities and what they can achieve
with the funding they're making available. Would
you talk to our listeners a bit about your background,
though, about where you grew up and went to school
and how did you end up where you are today? Yeah,
thank you, Mark. So I'm not Indigenous. My background
is I have parents who, father who grew up in
Cape Breton, mama who grew up in Fredericton,
New Brunswick. But after law school, my father
got a job in a town called Kamloops in British
Columbia. And neither of you have probably ever
been to Kamloops, but there's a river that runs
through the town. So there's a north side of
Kamloops and a south side of Kamloops. And I
would go to school and there were, you know,
you make friends and friends come and go. But
there was a consistent side of North Kamloops
where First Nations children, Kamloops Indian
Band at that time, you know, you'd make friends
from grade one to grade eight. And in grade nine,
you wouldn't see them anymore. And at that time,
there wasn't a lot of press or media coverage
on First Nations or. Indian bands within Canada
as a whole and it wasn't until years later that
you started realizing what a reserve was in Canada
what was residential school history like so I
started piecing together my past and the missing
friends only in my 30s and at that time and it
probably wasn't that much different from a lot
of Canadians but it created questions in your
head And those questions in your head were only
fulfilled after I transferred from one job to
FNFA and started learning more. But it was tied
to my background and tied to friendships that
seemed to come and go regularly, but for reasons
I didn't understand. Thank you for sharing that.
And I think you're right for many Canadians who
are not Indigenous. The past 20 years has been
eye -opening. For some, how to have their eyes
forcibly opened. For others, it solves a number
of questions they've had. But now we're in a
position with UNDRIP and the Charter of Rights
and Freedoms and Indigenous leaders and people
such as you are helping Indigenous organizations
take things to the next level. These economic
opportunities are not just for the Indigenous
people. The spinoff benefits are all of Canada.
Because Canada now has a chance to actually realize
its full potential because it's dealing with
the baggage that was never addressed. So in terms
of, you know, coming to your leadership role
at FNFA, do you want to talk a little bit about
how you ended up at FNA and a bit about your
professional background? Sure. You get labeled
in school pretty early on. And, you know, parents
will come there. teacher interviews and they'll
say, your son is good at mathematics. You should
pursue a course in mathematics. Unfortunately,
when I was growing up, there were standardized
occupations you would be steered towards. There
wasn't the wealth or variety of opportunities
that kids have now. And even if you went and
talked with counselors, you know, they would
hand you a pamphlet and there may be five general
areas that you'd look at and say, You know, you
should be a teacher of mathematics or you should
be an account or you should do this or that.
But there wasn't a plethora of choices. So coming
out of university, needing a job like most people
to pay the bills, the economy was not in good
shape. But the one thing about accounting firms
is they record things when times are good and
they record things when times are bad and they
were hiring. So I got into accounting at KPMG,
not because it was a passion or a love, but because
the door was open for employment. But being at
KPMG, you realize something about yourself pretty
quickly. You either recorded or, sorry, you liked
recording what other people did. In other words,
they were the decision makers and you recorded
it or made sure it was recorded properly. Or
you looked in the mirror and you said, I would
like to be a decision maker. And it was pretty
apparent to me that recording what other people
did did not fulfill me. I wanted to be the one
that was in the front making the decisions, yes,
no, timing, and doing the initiating of opportunities
myself. So after I got my CA degree and sat down
with a senior partner at KPMG in Victoria, the
discussion was, where do you see yourself? And
you never like to disappoint people, but the
look on his face when I said, I see myself working
elsewhere. It made me realize his passion was
accounting, but mine wasn't. Luckily, there was
an organization about three blocks away that
was a KPMG audit client called Municipal Finance
Authority of BC. And they were looking for an
accountant in their finance area because they
were a financial authority for all of BC's municipalities.
And when I transitioned over, my knowledge in
finance was... pretty limited to what you learn
in university, present value, future value. You
didn't know anything about bonds, debentures,
capital markets. But when I got there, seeing
what the news meant for the impact and interest
rates, geopolitical events, a currency crisis,
world leaders' comments, it started making the
work area real life -like. And when you got up
and you watch the news, you see how the impact
would be. So finance became a passion because
it was more than just numbers. It was tying in
geopolitical around the world. 24 hours a day,
world spins. And that created a path for me to
transition out of accounting into the finance
area. And I've never looked back. Great. Well,
it sounds like that was a win -win for KPMG and
you. Your boss there was probably... He doesn't
want to be an accountant. What are we going to
do with him? They, of course, had a client who
needed someone. And look at you today. So that's
great. Rob, do you want to talk a little bit
about F &A? I'm curious, Steve, how similar your
role at the BC Municipal Finance Authority is
to your role at FNFA. And I know you oversaw
the loan portfolio there. You do similar things
at the FNFA. And we spoke to Ernie Daniels on
our last podcast, talked a bit generally about
FNFA. But maybe remind our listeners, first of
all, what FNFA does. So first question was, are
they similar? So the Municipal Finance Authority
of BC is a financial body that goes and access
financial monies at low rates for municipalities,
towns, villages. different other bodies within
the province of BC to do infrastructure projects.
And around the late 1990s, early 2000s, there
was a knock on the door by certain First Nation
leaders asking whether they could join BCMFA,
in other words, get access to the low -rate loans
because their economies were trying to develop
and the infrastructure was trying to be developed.
And the answer was no. The provincial act that
created BCMFA said you must be a local government
as created under the province of British Columbia.
So it killed that. But what it did do is after
17 years at BCMFA, I looked in the mirror one
day and said, sometimes you can spend your whole
life at a job or you can take a chance and do
another job. And I started wanting to take a
chance to do another job. So when I started putting
my resume out there, the very... People that
knocked on the door for trying to create or open
the door for First Nations to also borrow at
low rates asked whether I would take a risk,
change jobs, and try to create FNFA. And you
can see how the names are similar. You know,
BC Municipal Finance Authority, First Nations
Finance Authority. So it was purposely copied
after the BC MFA model because it had been successful
since 1970 and had a great reputation. So they
are very similar. If you walked in and you saw
what we did and you saw what BCMFA did, you'd
say, wow, you guys look totally like you parallel
each other. And that did occur for quite a while.
But infrastructure is not the way First Nations
are going to create wealth. Because if you own
a house, you know, there are certain things that
come up called maintenance. There are certain
things that come up called repairs. And there
are certain times you have to hire people to
be. the maintenance or the custodians of those.
So they are a cash user, not a cash creator in
a lot of cases. So where BCMFA and FNFA differ
is municipalities are to provide services to
the public. First Nations are to provide services
to their membership. And here's the key difference,
Robert, is First Nations do not get 100 cents
on the dollar to run their programs. social programs,
health programs, education programs, their governance
of their administration. They need to make up
a certain sense on the dollar. So where does
it come from? It comes from economic opportunities.
So the one difference you'll see between BCMFA,
my old job, and FNFA was the creation of FNFA
of the ability to lend to First Nations so that
they can get in economic ventures. Those profits
then create the missing cents on the dollar for
their programs, or it allows enough money to
be leveraged into other opportunities. So FNFA
is an expansion of BCMFA's mandate, both infrastructure
and now into economic opportunities as well.
It sounds, Steve, like you were there in the
very early days. When did you join FNFA? April
1st, 2008. And, you know, you look at it and
April 1st is the start of the fiscal new year.
So it made sense that way. But when I started,
I thought this would be a slam dunk, six months,
because there's already proven track records.
It goes out there, municipalities banding together.
There's a proven track record of capital markets
accepting a pool of local governments to borrow.
And they borrow close to the same rate as the
province of Ontario. So how could it be difficult?
Well, my first eye -opening moment was that even
though First Nations saw themselves as a level
of government, the bureaucrats in Canada did
not always see that way. They would write checks
to the chief and council, spend it on this program,
social needs, spend it on this program, medical,
spend it on this program, health, spend it on
governance within your administration. And then
they expect reports back. They were programs.
The challenge to turn the bureaucratic mindset
from seeing First Nations as a program into a
level of government and give them the respect
they needed was challenge number one. And all
of a sudden, I realized six months ain't going
to happen anymore. It is not going to be a slam
dunk. It's going to be a battle. So I spent the
first year from 2008 to almost the end of 2009
trying to convince the bureaucracy that First
Nations should be respected as a level of government
and failed. So if you fail, you can either turn
around and run away or you can take a different
approach. And I took a different approach and
I said, if you can't convince the bureaucracy,
then get somebody else to convince the bureaucracy.
So in 2009 and 10, I started going out to the
credit rating agencies, Moody's, Standard & Poor's.
I started going out to the investors, life insurance
companies, provincial pension plans, capital
markets. players that lend monies to other levels
of government and said, if I can get a credit
rating that allows access to the capital markets,
will you deem First Nations to be a level of
government? And they all said yes. And they wrote
letters of support for that. So once I had that,
I thought, okay, how do we leverage these letters
of support into turning the bureaucratic tide
in favor of respecting them as a nation and as
a level of government? Luckily, there was a gentleman
MP, in the Chilliwack area, Chuck Strahl, who
said, I will stand up in the House of Commons
and I will support the creation of a second act
that focuses on First Nations being able to leverage
their own source revenues into the capital markets
as a level of government. And I will put my hand
up and put a motion forward. And it passed. Conservative
government at that time in Canada. So with that
one MP support. We were able to create a second
act under which we now manage our operations.
And it also created the path for rating agencies
to say, we will give you the credit ratings to
access the market. The investor says, we're sitting
there waiting to lend you the monies as First
Nations request it. And the bureaucracy said,
we've got orders from the political side to now
treat them as a level of government. And the
path was created. Well thought. Yeah, no, it's
a great story, but it still was a little bit
longer before you could raise your first debenture.
And so there must have been more trials. It was
not six months, but maybe six years from the
time you joined to get that first financing.
Yeah, so the second act came into force in November
of 2011. And that's the time you just interviewed
Ernie Daniels, our CEO and president. That time
Ernie was hired. when our second act was created,
because even though I could create the road of
which First Nations go down to go access low
rate loans. And to give you an example today,
chartered bank crime in Canada is 6 .45%, 6 .45,
almost six and a half. Our lending rate is 3
.95, two and a half percent below bank crime.
So you can see, if you were simply doing it on
mathematics, you'd say, Absolutely, I'm going
down that path. Why would I not? Because every
return on investment is going to be that much
higher. But what I didn't understand was the
history of First Nations and how they were used
to knocking on Canada's door to try to access
funding every year. They were completely overloaded
with the reports that they had to complete on
the program monies they received. And an education
was needed for them to understand what the capital
markets were. what is a debenture, et cetera.
So I did not have the trust or even the knowledge
of what First Nations, how they operated, and
they didn't have the knowledge or trust of how
I operated. So Ernie and I symbiotically complemented
each other very well because if you listen to
his podcast, you'll find out his history is in
different areas of First Nations departments,
not departments, but organizations that have
created a good comfort level with his name and
what he's done over the period of time. So when
we would go present together to First Nation
communities, I could tell them about what the
economic opportunity or mathematical advantage
was to join an FNFA. He could then tell them
about the comfort level of why they should take
a risk of joining with us and taking a new path.
So it wasn't just creating the path, but it was
also creating their understanding, their trust,
and their comfort that they would take a risk
of going with us. And in 2012, June of 2012,
our first loan went out the door. But it took
two years to get our second and third and fourth
and enough loans out the door that they accumulated
to a large enough amount that in June of 2014,
we could turn those short -term loans into a
debenture. So it took a while, but trust and
comfort of the communities was the key pivot
that allowed us to succeed. And it seems to have
snowballed from there 10 years after that first
debenture. 10, is it? Vouchers have been issued,
more than $2 billion raised. Maybe just some
highlights for the past year would be helpful.
What sorts of investments have you made? Yeah,
I know Ernie talked about what reconciliation
means now. You know, you have Canada and certain
provinces have passed UNDRIP, United Nations
Declaration on the Rights of Indigenous People.
That's a piece of paper, and it allows you to
shake hands, take pictures, and everybody feels
good about themselves. but it doesn't create
those missing dollars under your budget as a
First Nation community to operate your programs.
You need more than just a handshake and a photo
opportunity. So when economic reconciliation
started transitioning both in the public eye
and the government eye at the federal and provincial
level into economic reconciliation, we finally
had opportunities to start looking at not just
funding infrastructure, which is needed to make
communities healthy, but it doesn't always allow
growth. And that doesn't allow profits to come
in. So 2021 was the first time that FNFA, we
took a risk. Ernie and I sat down and we were
knocked on the door by seven Mi 'kmaq communities
in the Atlantic Canada. They wanted to be 50
% owners of seafood or Clearwater seafoods. Never
happened before. Two things, we'd never had a
group of First Nations wanting to work together
on an economic venture. And we'd never lent $250
million, a large size for us at that time in
2021, to take a risk that wasn't infrastructure,
but it was business related. And that led into
hiring outside legal counsels, doing due diligence
on the financial economic side, taking a look
at the capital markets reports on whether Clearwater
Seafoods was a well -run company. What was the
capacity for the market to absorb the certain
amount of seafood? or harvest that the company
had. But in January of 2021, after lengthy discussions
with those seven communities and our board of
directors, we put our thumbs up and said, let's
fund this opportunity. That transitioned us into
knocking on investors' doors and said, we're
raising money for infrastructure. Here's a picture
of a building. Here's a picture of a water system.
Here's a picture of housing into a picture of
business. And it allowed something else to come
out. Mark and Robert, because for the first time,
we started realizing we need to do communications
on what we do. It's no longer a picture. We need
to do testimonials of what the impact of these
economic ventures are to the communities. What
is a human story? What did chief and council
do with the profits that Canada had not fulfilled
under their obligation for infrastructure creation?
Sometimes we would do videos. And by doing that,
when we sat down with investors in Canada, US,
Europe, Asia, all of a sudden, it wasn't so much
the dollar size that mattered anymore. 250 million,
that's fine. Now we're doing 500 million. This
year, we're going to do 1 .2 billion in 2024.
It became the story because as we were transitioning
from infrastructure to economic reconciliation
ventures, investors out there were transitioning
to social investing. What is our money doing
when we lend it? Is it causing harm? Or is it
causing good? And so when we would sit down,
Ernie and I, with the investors and show them
the videos and show them the human side of the
story, all of a sudden you started seeing our
ability to raise the money needed by our membership
grew substantially. Our largest client, as you
know, is a 50 .1 % owner of Cedar LNG. $1 .4
billion, our board approved for that project.
We were fortunate that as we were changing, the
people that invested in us were changing also.
And so going forward, you're going to see economic
ventures increase in size. You're going to see
First Nations that can't do economic ventures
individually will partner with others. But the
good thing about that, that means that nobody
is left behind. And no matter what size First
Nation you are, what your capacity is internally,
you're going to have opportunities to have profits
to come in and make those community priorities
a reality, which they weren't 10 years ago. That's
great. You mentioned nations of different sizes.
Ernie told us almost 170 borrowing members at
the moment, and so First Nations of different
shapes and sizes. I take it it's not just then
wealthy First Nations that are able to take advantage
of some of the funding that FNFA can provide?
No, you know, if we could only fund wealthy,
creating the have communities economically and
the have not communities economically. So the
model that was created that I spent three and
a half years trying to get the legislation through
didn't differentiate between size or capacity.
And just like you would drive through the province
from which we situated, we're on West Bank, First
Nation lands our office. But the province of
BC has communities that have 300 people and the
greater Vancouver that has 3 million people.
but each one of them have needs. In First Nations,
you can have a community that has 210 members,
and you can have some that have 13 ,000 members,
but they all have needs. So the model that was
created didn't differentiate between size or
needs. What it did say was for every First Nation
that joins FNFA, and we'll go back through the
numbers, there are 634 First Nations across Canada,
367. have put up their hands voluntarily and
said they'd like to be added to the Act. So over
almost 60 % in Canada. 190 of those 367 have
completed the full process for FNFA membership.
So we're at about one -third of the communities
in Canada. Our first adventure in 2014, we had
13 members. So we've gone from 13 up substantially,
and it'll continue to grow. But when we created
the model, it's just like you can go, and show
the bank what you have as a salary. And they
will do two things. They will give you a credit
card with a certain limit based upon your ability
to pay. And they will give you a mortgage or
a line of credit up to a certain limit based
upon your ability to pay. So our model goes upon
what can a community afford to pay so we're not
doing harm? What revenue streams do they have
that can support that loan? and make sure when
we lend, we're not causing those revenue streams
to go from a surplus situation on their audited
statements to a deficit situation. And it doesn't
matter whether your capacity to borrow is a million
dollars or $500 million. And I say 500 because
our largest client right now has $500 million
outstanding by themselves. So it's meant to allow
communities to grow at their own pace, in a safe
way, at their own timing. but not in a way that's
going to overload them with debt that will harm
their bottom line. Can you talk a little bit
about, you mentioned some of the social investors
in ESG. Do you have those types of funds or sustainability
funds invested or lending to you buying the debentures?
Does every investment you make have to pass a
sustainability test? And maybe... Are there any
sectors that you just won't invest in because
of some of that criteria? Robert, great question.
You know, well, seven years ago when ESG and
social investing came along, I had no idea whether
it was going to be a flavor of the day or whether
it was going to persist and grow. Certain parts
of the world, it's more formalized than it is
within Canada. Europe, for example, is very formulaic,
which could be a good thing. In Canada, it's
more individual by investor. What are their policies?
What's their checklist? What do they look for?
When I started putting together the ESG, the
first step was to gather information from our
First Nation members on what projects they were
having come up, because we're already funded
the ones they had, but what was coming up? And
then once we had that, Ernie and I created a
board retreat. We have 11 board members from
BC all the way to the east coast of Canada in
Nova Scotia. And we started talking about how
there was a changing landscape of what investors
were looking for, because we compete with monies.
We compete with the cities. We compete with the
provinces. And if we can't compete, then the
investors are going to fund them, but not us.
And the chairman of FNFA put up his hand. He
said, Steve, and his name is Warren Tobogganong
from Wasauksing First Nation in Ontario. He said,
did you know that most First Nations have a constitution
or a land code? that identifies that chief and
council can't borrow if it's going to cause harm
to the air, land or water. And I've been here
for over 10 years and I had no idea. I probably
had never looked at a constitution or a land
code. But when we started going through it, and
then we found that the deputy chair said, well,
we have one too, but we call it a land code,
not a constitution. It started to show that ingrained
in First Nations. chiefs and councils, communities,
and limitations on what they can ask for is the
very ESG components that investors are looking
for. It just wasn't formalized. It was formalized
at their community level, but cities of Ottawa,
capital of Canada, may have a policy that they
want to do a green bond, but I don't think they
have something that formulates it in a constitution
like our membership. So we have not to date.
gone and got a third -party opinion on what our
lending practices are, whether it meets ESG or
sustainable or social bond qualities. But what
we do do is make transparent to each investor
the access to the constitution or land code of
the communities that are boring. We show the
projects that they're boring for, the impact
on the community, job creation, and basically
how it's going to transition that community from
point A to point B. And then we let each investor
decide whether it meets their checklist or not.
We do do something different with Bloomberg,
though. When Bloomberg puts our debenture issuance
information up on their screen, they go through
a checklist with us through every loan that we
make for that particular debenture. And today
we've been successful to get the sustainability
tag. So no formalization of a third party opinion,
but we do go through the Bloomberg process to
make sure it's deemed sustainable on their informational
site. Wow, that speaks volumes. Yeah, it's a
unique setup, but perhaps in some way it keeps
FNFA from shifting because we are not in charge
of changing land codes or constitutions at the
community level. It's ingrained for them, so
that limits us into certain areas. So what can
we not do? Well, we won't get into certain areas.
I'd be very surprised if we were going into areas
of gun manufacturing, cigarette manufacturing,
those areas that are deemed to be offside. You
know, there's always going to be investors that
will buy it. But because we borrow as a group,
we have to make sure that letting anyone loan
in does not harm the group itself. And does that
go for the pooled revenues as well that are in
the... In the pool, are there restrictions on
what types of revenues will be allowed to back?
Yeah, so the revenues were a key part of getting
the second act, which I worked on together. Because,
you know, you can accept First Nations level
of government. Okay, that's fine. That's a respect
level. But the second thing is, what's safe to
lend them money? Will it come back in the form
of loan service payments every six months to
the investors? So the second act. said a couple
of things. It said that if a First Nation is
going to join FNFA and request the loan, then
FNFA is obligated to take a look into the stability,
the strength, and the consistency of the revenue
stream. So we do a due diligence on that. And
if you see a revenue stream that fluctuates up
and down and perhaps cannot service loans consistently
every six months, You either add a second stream
to it to make it safe or that stream is not viable
for loan service. And then the act did a second
thing. I put in there something that Ernie mentioned
called a revenue intercept model. So keep in
mind, if you remember what 2008 and 2009, where
it was a housing crash in the US and building
an act to try to get capital market acceptance
during that period of time, you had to create
comfort levels and safeguards. So Revenue Intercept
is a First Nation, if they join FNFA and they
want to take out a loan or request a loan, then
they take a look at the revenue agreements they
have. And every First Nation have revenue agreements
with the province in which they reside. And those
are strong, consistent, stable revenue streams.
But chief and council, when they want to take
out a loan, send to the province what's called
a redirection letter. And they said, province,
you used to send that money to our bank account.
We're now going to take out a loan with FNFA.
Please redirect it to FNFA's trust account. And
those trust accounts have a very simple job.
They're a clearing account. Pay FNFA the loan
service. And two days later, when all the money
clears, give the balance back to chief and council
to spend on their community. So the revenue streams
are absolutely key to how we lend. And if they
do not meet the stability, strength, and consistency
tests, they cannot support a loan by themselves.
maybe together with another stream. When we got
into economic reconciliation, all of a sudden
we started adding the second level of streams.
And that was future agreements with potential
projects. You could have provincial hydro agreements
that are under our purchase agreement. And those
are contracts, so we could lend against those.
You can have transmission line agreements with
a province. You can start having certain companies
whose strength of operations meet capital market
tests. In other words, the credit departments
of the banks would lend to them also. So we are
absolutely focused on the strength of the revenue
stream. Because as Ernie mentioned, we don't
just make a loan to a community, we borrow as
a group. And the group is 190 First Nations within
FNFA that said we all stand behind each other's
loan. And the last check is Our board of directors
from BC to Nova Scotia have to be unanimous in
accepting a loan request. So they take a look
at the strength of the revenue stream. They take
a look at its sufficiency to cover loan service.
They take a look at the project, the impact on
the community. They take a look at, does a revenue
stream exist as long as a loan service term?
And if any one of them is uncomfortable, loans
don't occur. So to date, We have had zero late
payments. We've had zero losses. But it's all
because of the process set up to make sure if
you're going to borrow as a group, you protect
everybody within the group. So the revenue streams
are absolutely key and essential focus for us
for each loan. In your governance structure,
the board is made up of just two representatives
of the members, correct? There's no outsiders
or even management on the board and the board
reviews every single loan proposal? Absolutely.
So in order for a joint several group to mean
anything, which means one for all, all for one,
you have to make the decision makers request
in the loan have to be able to speak on behalf
of their community. So who speaks on behalf of
the community? Elected chiefs and elected councillors.
So our 11 board members are either chiefs or
councillors from amongst our membership. And
every July we have an AGM and every July the
membership. votes on who they would like to represent
them for the next 12 months. So you have to be
a chief and you have to be a councillor so that
it means you do speak on behalf of your community
and therefore you also speak on behalf of the
190 FNFA members. We cannot have anybody outside
because if a problem developed, you'd say that
one board member who's not a chief or a councillor
said, well, I don't have any skin in the game.
I am not a chief. I'm not a councillor. I can't
bind my community to this problem, so it doesn't
impact me. So the rating agencies made it very
clear, and I agreed with them, that if you're
going to borrow large sums of money, then the
people that should be on the board deciding whether
that loan occurs or not occurred are ones that
are impacted by the decision -making, and therefore
it is a chief or it is a councillor from amongst
our membership. Impressive. Maybe, Steve, it'd
be worth talking. We had Chief Crystal Smith
on the podcast a few weeks ago. She was very
complimentary of your role in the F &FA's role
in financing, helping finance Cedar LNG. Could
you tell us a little bit about how that transaction
evolved and closed earlier this year? Ah, Cedar
LNG is one of the reasons why transitioning out
of accounting. where you go home at the end of
the day and you talk to your family about, oh,
guess what I did today? I audited this and nobody
listens to you. Into financing projects that
have absolutely material beneficial impacts on
community life. Love it. So Cedar LNG is a prime
example of how Canada is 4 ,000 miles long, probably
6 ,000 from coast to coast. And each geographical
area or province within Canada has different
opportunities for the First Nations in that area.
So you go to the East Coast, they're business
-related opportunities. That's why they work
as groups. You go into central Canada, Quebec
and Ontario, and they focus on electricity generation.
It could be through wind farms. It could be through
solar. It could be through transmission lines.
You go into the prairies, and they have different
opportunities there. And then you get into B
.C. And Cedar LNG is on the west coast of BC
in a community called Haisla First Nation, who
spent years working on this long before I came
along. So the hard work was done prior to me
getting involved in the financial side and Ernie
getting involved in the financial side. But in
BC, a lot of projects are resource -based. Some
are continuing to be opportunities for electrical
power generation. But LNG is what we have. in
BC and sometimes in Alberta that crosses the
BC lands. But the key thing is you have this
massive population in Asia. And this massive
population is transitioning very quickly from
rural to urban environments for jobs, for a change
of lifestyle. But how do you create electricity
for them over in Asia? A lot of it's coal -based
still. Coal is not a great thing for the global
environment. And so transition away from coal
into LNG, which may not be the ultimate place
you want to get to because it is still a fossil
fuel, but it's a lot cleaner, is what the opportunity
was. When we got contacted by Haisla First Nation,
you know, the first thing they threw out was,
you know, it's potentially up to $1 .4 billion.
Our largest loan to that time to any one community
was $350 million. And so we had a factor going
up four times. And it completely changed. how
we did our analysis within FNFA because we had
a board of directors that was used to certain
business opportunities, certain infrastructure
needs. But when we got into something that large
and a construction term of four and a half years,
it completely rewrote how we did our analysis,
started looking at getting lawyers that were
familiar with these type of ventures. We started
working with our banking syndicate, the Chartered
Banks Capital. Capital Markets Division of the
Chartered Banks to find out their reports. We
took a look at the private sector side and we
piggybacked on their data profiles or pages within
the data room and the information and the forecast.
But what it did do is it got our board comfortable
after six months of discussing it and going back
and get more information, more information, that
we've developed a process that now allows future
opportunities that come forward. to be much more
smooth -lined and much more what you would call
a transition from where their former needs were
infrastructure into large -scale opportunities.
So our board had to transition too. And you can
go back and say we're a joint several group where
you protect each other within the pool, and all
of a sudden you're going to have one community
that's going to have a materially larger loan
than anybody else within the pool. Two things
came out of it. One, FNFA transitioned itself,
which was really needed because economic reconciliation,
we have to grow as our clients grow and change.
And second of all, our board has now transitioned
into a business evaluation board. And that means
that as opportunities come down in different
parts of Canada, which is why we have board members
from BC on the West Coast to Nova Scotia on the
East Coast. they are usually familiar with the
opportunities within their geographical area
themselves. Sometimes they're familiar with looking
at the contracts the lawyers put in front of
them and say, we have a similar agreement, different
in size, but we have a similar agreement. We
see the safeguards. We see the shareholder agreement
points. We see what protects the communities,
et cetera, et cetera. And it has allowed us to
grow. So going forward. If economic reconciliation
is a way for First Nations to get profit, to
close the funding gap on their programs, we had
to transition to be ready for it. And luckily,
that one project pushed us into that area. So
we're good to go for the forward as growth and
opportunities go as well. Fantastic. In the end,
I don't think you did the full 1 .4, but what's
your piece of that? So we actually did do, we
are, sorry, we did approve the 1 .4, but because
it's a construction project, we have 250 million
has gone out so far. In the first two quarters
of 2025, another drawdown will happen. So the
money's being drawn down, same as you would draw
it online to credit as you build your house,
pay the architect, pay the contractor, et cetera.
We are having the heist that draw down the monies
as their needs to fund construction occur. And
under that, something else transitioned. So if
you took a look at our debentures to date, and
Ernie mentioned we've done 11, they were all
10 -year debentures. Even though our clients
had the right to repay over 30 years, we would
lock in interest for 10 years and then refinance.
And the reason for that was our debentures weren't
large enough to say, some of our clients have
a 30 -year need, so we'll do a 30 -year debenture.
Some of them would only want 10 years, we'd do
10 years. It would have fractured our debentures
into smaller sizes. And investors would have
said, I don't like the smaller sizes because
they like liquidity, which is the ability to
have a large debenture they can buy and sell
it and find easy. What the Haisla CDR LNG 1 .4
billion is going to do is contractually, it says
they want not to have a 10 -year, but they want
a 30 -year debenture. So that opens up our talking
with investors who no longer want to fund 10
years, but they love 30 years. And it could be
a life insurance company. It could be a reinsurance
company. There can be a pension plan that says
we invest long term because our employers, some
of them are going to be working here for 30 years
or retire for 30 years. So the Cedar LNG has
not only created our opportunity to fund larger
sizes, but it's opened our ability to converse
with investors who didn't pay attention to us
in the tenure area, but definitely pay attention.
We start talking 30 years. So it has transitioned
us into an organization that's growing where
we weren't there a couple of years ago. And you
have investors from outside of Canada, we understand.
Can you tell a little bit more about the international
investor profile? Yeah, and that's something,
you know, we're very interested in exploring
Beacon in front of a European base because sometimes,
as I mentioned, it's the storytelling that attracts
the investor base. So we have investors, and
as Ernie mentioned, we can't name names, but
we have a number of investors in different countries
in Europe based upon the... social, and what
they perceive under their checklist, the ESG
lending that we do. We have a number of investors
in Eastern US, and we've had that since 2014,
but it's growing. And we have investors, there's
a central bank in Asia, and there's also another
central bank in Europe. So it's the storytelling
that is starting to capture the interest of these
investors, because it's very repetitive. And
I used to do investing at BCMFA. You know, you
buy the same bonds over and over again, but it
doesn't move you as an investor into that social
area that you want to go. As FNFA's debentures
get bigger, those investors that weren't interested
when we did $100 million, but now we do $500
million or this year $1 .2 billion this year,
they're saying you're up to a sufficient size
where we would like to participate because we
also transition now into a social investing area
through FNFA. So Europe is going to be a key
one going forward because social ESG is a key
investment criteria there. Sometimes in the US,
but not always. But it's also starting to grow
in Asia as the transition from coal into LNG
is starting to occur. So as we grow, our investment
base throughout outside of Canada is going to
need to grow too. So we're excited about that
because we all seem to be developing together.
Well, please mark the first week of April 2025
in your calendar, the second annual Canadian
Indigenous Investment Summit here in London.
We would be very interested in that because I
think the time is to start educating those as
our needs start growing into areas that they
would perceive that they would welcome also.
Yes, certainly the story. And that's why we're
doing what we do and having individuals such
as yourself and others on the program. Just coming
back to Canada for a sec, for those of our...
Audience who don't know, the Global Mail is,
I guess, the national newspaper in Canada. I
think it's still called that. And you're one
of the recipients of the Best 2024 Executive
Award. So congratulations to that, Steve. Obviously,
with what you're doing and how you've taken the
organization along with earning to these levels,
it's great to see that individual recognition
as well. Thank you, Mark. You know, the one thing,
if you're at the management level, you always
look forward. And sometimes in those quiet moments,
you know, when you're not planning where the
organization is going and how you're going to
get there, you kind of reflect on whether you're
doing a decent job creating motivation for staff
to follow with you or not. And so this award
I was surprised at. But, you know, at the same
time, you look at it and you're pretty proud
about it because. I'm not getting this award
because I'm doing good audits. You know, maybe
part of getting this award is because what Ernie
and I have created is causing a materially positive
impact on First Nations that need it. want it,
desire it. And so that's a bit humbling, but
at the same time, it's also pretty rewarding.
So I was surprised, but really pleased when I
heard that earlier this year. Congratulations.
Yeah, very well earned. And it's credit to you.
And it must be nice for you to see your vision
and those of some of the others in the early
days of FNFA come to fruition. It was. Must be
an exciting and busy time. Absolutely. And, you
know, some of the people that did hard work before
our get here in the first part of our act, which
didn't really pan out to the property tax related
so much in supporting loans, but their hard work
is part of this too, because it was a teamwork
to get here. That's fantastic. And we're very
pleased to have yourself on. We've had earlier,
we've had a really great insight, FNFA. and what
it's doing to bring economic opportunities to
the Indigenous communities across the country,
but also about reaching out to the capital markets
and demonstrating what a great opportunity this
is for investors. And now you have these different
terms that match with their own needs. And as
you know, ESG is so important over here in the
UK and Europe. So, Steve, we'd like to thank
you for being on our podcast today. We look forward
to keeping in touch with you and seeing you over
in London shortly. Love it. Count us there. Mark,
Robert, it's been a pleasure. And thank you for
having me on. I appreciate it.