Risk always a reality, but shouldn’t discourage investing in Alberta
Province is rich in opportunities, but needs access to capital, writes Mary Moran.
Picking winners in the stock market is a tricky business, but that shouldn’t deter investments in opportunities for success in Alberta.
That applies to individual investors as well as governments.
A recent Calgary Herald article added to the long-standing debate whether governments should be involved in “picking winners and losers” in business as they implement economic policies to encourage growth and prosperity.
It’s debated in coffee shops and university lecture halls, and it’s a question put to governments of all political stripes around the world and across Canada.
In 2016, it’s been a topic of discussion for Saskatchewan Premier Brad Wall and Alberta Premier Rachel Notley.
It’s evident in Alberta that we live in a capital-constrained world these days. The Conference Board of Canada has calculated investment in the oil and gas sector will decline by $14 billion this year after a $19-billion decline in 2015.
Outside the energy sector, the dollar values are smaller, but the financing challenges for businesses are bigger.
We need access to all sources of capital — from angel investors, venture capitalists and private equity to individual and institutional investors.
Taxpayer dollars flow throughout the financial system and the economy, but the topic reemerged in this province in June. Alberta Investment Management Corp. (AIMCo) made a $200-million investment in Calfrac Well Services — a Calgary-based pressure pumping company active in the oil and gas industry globally.
It came a few months after AIMCo’s investment in Calgarybased TransAlta Renewables.
Established in 2008, AIMCo is Canada’s fifth largest institutional investment manager and has more than $90 billion in assets under management.
It invests worldwide on behalf of two dozen pension, endowment and government funds in Alberta and operates at armslength from the government.
The “arms-length” element of the relationship is typically what’s called into question.
A July 18 opinion column by Chris Nelson painted a picture of Finance Minister Joe Ceci as “Alberta’s answer to the Sage of Omaha” running AIMCo like legendary U.S. investor Warren Buffett. Presumably, the suggestion Ceci is considering liquidating all $18 billion in the Heritage Savings Trust Fund to “bet the farm” on gold was literary licence.
For all the power of the finance ministry, that clout doesn’t extend to the minister micromanaging the likes of AIMCo CEO Kevin Uebelein or board chairman Mac Van Wielingen in doing their jobs running a highly successful investment firm.
The Government of Alberta announced last October $540 million was being allocated from the Heritage Fund to target “growth-oriented companies” through AIMCo during this recession.
Concerns were expressed about politicians putting the taxpayers’ money at risk, but Notley and Ceci were adamant all investment decisions would be made by experts at AIMCo.
They have repeatedly said the government won’t be picking “winners and losers” while Uebelein and Van Wielingen have been equally emphatic AIMCo is in the business of making profitable investments, not funding economic diversification.
AIMCo’s 9.1-per-cent return for investors in challenging times last year suggests it’s doing a good job.
In its annual report in June, Van Wielingen said AIMCo will continue its disciplined investment strategy and described the involvement with the Alberta government as “a robust collaborative relationship … supported by open, transparent communication.”
At Calgary Economic Development, we support investment in local companies and can attest that the challenges to access capital is one of the biggest issues facing economic expansion and diversification.
AIMCo has generated impressive returns for Albertans and safeguards are in place to ensure there’s no political interference.
All investment carries risk, but Alberta is opportunity-rich and our highly educated population is ready to go to work. We need investment. The professionals at AIMCo have proven to be more than qualified to assess the prospects for a company and show others the way by seeing the opportunities for prosperity by investing in Alberta.