Look for significant new Indigenous-linked projects to be greenlit now that the Canada Infrastructure Bank (CIB) has unveiled its new Indigenous Equity Initiative.
Hillary Thatcher, the CIB’s managing director for investments, says the program represents a major step forward in enabling Indigenous communities to obtain equity partnerships in new projects across the country, particularly, she expects, in such sectors as clean energy generation, battery storage, energy transmission, infrastructure to support mining development and the transportation sector.
“I think it is going to be quite a breakthrough,” said Thatcher on Nov. 27, the day the CIB tabled the initiative. “We’ve been asked to make loans to them, but we haven’t been able to do that until now that we have an initiative that’s been approved by the federal government.”
The CIB’s mandate is to invest in infrastructure that has public impacts to address climate action, connecting communities, economic growth and Indigenous participation.
Priority sectors are public transit, clean power, other green infrastructure, broadband and trade and transportation.
In its five years of operation, the bank has invested $10 billion in 48 projects with a total capital value of $28 billion.
There are already numerous projects with Indigenous leadership in the CIB portfolio, including the Oneida energy storage project in Ontario, Atlin Hydroelectric in Yukon and British Columbia, Bekevar Wind Power in Saskatchewan and Deerfoot and Barlow Solar in Alberta.
The new initiative will spur the next wave of projects, said Thatcher.
“I think the opportunities are really starting to unfold as to how the CIB can make an investment to help move those projects forward a bit faster with faster access to capital for those Indigenous participants.”
Thatcher explained Indigenous communities often lack access to capital in order to purchase equity stakes. Market lenders are often unwilling to lend to Indigenous communities against those equity stakes.
“The mandate was given to us officially in the spring budget, and we have moved forward with the development of the initiative and after months of discussion and consultation with communities and developers we have come up with what we believe to be the right product to make sure that communities can access capital in areas where we have a mandate to make investments as well,” she said.
The Indigenous Equity Initiative will provide low-cost loans to Indigenous investment entities for projects in which the CIB is also investing.
Other principles of the program include aligning stakeholder interests to accelerate “transformative infrastructure projects across Canada which are in the public interest,” and furthering the “federal objective of reconciliation and economic inclusion of Indigenous communities and peoples.”
The project must be located on First Nation, Metis or Inuit traditional territory; communities must invest through their community-owned economic development entities; and project sponsors must demonstrate the financing gap that exists for the purchase of the Indigenous equity stake.
“We are seeing gaps in major transmission assets, and some of the big ports where indigenous communities are seeking an ownership stake,” said Thatcher. “We’re hearing that there’s major rail happening in the country that indigenous communities are interested in being in an ownership stake.”
The loans are not to the project itself but rather to the “holdco.”
“That’s the organizational structure we would lend into. We would lend up to 90 per cent of their equity requirements,” said Thatcher.
“It’ll be affordable financing. We want to make sure, like on a regulated asset, if you’re seeing an eight- or nine-per-cent return on equity, we want to make sure that the community is also seeing some distribution so that there’s still some cash flow going to all equity partners, including the Indigenous partner.”
Follow the author on Twitter @DonWall_DCN.