A first for Addenda Capital

Lands U.S. pension fund client

Six months back, Montreal- based Addenda Capital Inc. launched its first foray into the U. S. i nstitutional i nvestment world.

Addenda chose to enter that market by offering a collective investment trust with a partner, SEI Trust Company. In this way, it followed the path set by Fiera Capital, another Montreal- based money manager, a few years back.

An alternative approach would have been to offer segregated funds and go it alone, both of which are expensive. But CIT’s are pooled equity funds, operated by a bank or trust company, suited to retirement plans and pension funds and are low cost, in part because there is no board and no SEC filing requirements.

Addenda, which started life largely as a fixed-income manager but which is now one of the country’s largest environmental, social and governance (ESG) investors, has landed its first U.S. client — a U. S. pension fund which has agreed to invest “multimillions” in an international equity fund.

“It’s a bit of the chicken and the egg,” said Charles Lemay, Addenda’s U. S. head of business development. In other words, clients want the opportunity provided by the product but don’t want to be the lead investor. “Getting the first client is the most difficult,” said Lemay, who joined Addenda one year back. “It’s all about building blocks.”

The new f und will be managed by a team of international equity managers who joined Addenda a few years back from CIBC Asset Management. In the past those managers have been successful in attracting U. S. dollar assets.

“Our edge in the U. S. is our ESG- friendly approach to international equity, and our pooled fund focus which is good for some smaller pension funds,” said Lemay. Addenda has been SECregistered for a few years. ( Toronto- based Burgundy Asset Management is also SEC-registered.)

Now with its first client, what’s next? Lemay said that unlike some others, Addenda doesn’t plan to acquire U. S. managers. “We plan to grow it organically,” said Lemay, noting that the CIT product has the capacity to expand. ( As well, Addenda will unveil other products.) And that growth will be underpinned by what he calls the team’s “excellent track record” of managing international equities.

Despite those advantages, one of the real keys is building a relationship with the i nvestment consultants, those who help pension funds guide their manager selection. While a strong five- year performance is necessary it is by no means sufficient.

EAGLE ENERGY VOTING

It’s not on a par with the mere 107,000 votes in three states that determined the outcome of last year’s U. S. presidential election. But the proxy fight at Eagle Energy Inc. was still very close with about 340,000 votes being the difference between the lowest supported management nominee and the highest supported dissident nominee. Overall the four elected directors received about two million more “for” votes than the dissidents. But the four successful directors received almost four times as many withholds as did the four dissident nominees.

And the turnout was impressive: more than one quarter of the votes attached to the 42.9 million shares outstanding were cast for the management nominees and a tad less for the dissident nominees. In all about more than half the shares were voted.

At its 2016 annual meeting, about 10 per cent of the shares were voted.

In releasing the voting results, Eagle adopted a different approach to that taken by issuers in two other proxy contests: at both Granite REIT and Liquor Stores NA — where the dissidents won the day — the voting results weren’t released.