Published in The Globe and Mail, February 15, 2025, by Jameson Berkow, Capital Markets Reporter

Clint Davis never thought he would live to see an Indigenous-owned investment dealer launch in Canada.

Today, the 54-year-old Inuk from Labrador is chief executive officer of Cedar Leaf Capital, an investment dealer majority-owned by three Indigenous shareholders: Nch’kay’ Development Limited Partnership, Des Nedhe Financial LP and the Chippewas of Rama First Nation. Cedar Leaf received regulatory approval to begin operations in October, meaning it can start connecting companies and governments that are looking to sell securities with investors who are looking to buy them.

Sitting in the conference room of his new offices on the 16th floor of Scotia Plaza in downtown Toronto, Mr. Davis said Cedar Leaf will serve as a bridge between Indigenous communities and capital markets. His goal is to ensure those communities can access the financing they need to buy meaningful ownership stakes in projects being developed across Canada.

“I didn’t think that was going to happen in my lifetime,” Mr. Davis said. “I have been pleasantly surprised to have been proven wrong.”

Years of empty promises and false starts have left many Indigenous Canadians skeptical that any new initiatives will translate to real progress toward economic reconciliation. Yet Cedar Leaf is simply the latest member of a rapidly expanding network of Indigenous-led organizations that, together, are gaining real, sustained momentum that is impossible to deny.

Their activities have already started making progress toward closing what the Assembly of First Nations estimates is a $349.2-billion infrastructure gap between Indigenous and non-Indigenous communities across Canada. The investments go well beyond infrastructure for those communities themselves. Many are helping communities acquire stakes in projects of critical importance to the Canadian economy that are being built on Indigenous territory. One of the biggest, the US$4-billion Cedar liquefied natural gas (LNG) project in Kitimat, B.C., is majority-owned by the Haisla Nation and received a positive final investment decision in June.

Cedar Leaf’s launch counts among a recent flurry of Indigenous deal-making. At least 111 Indigenous communities across Canada either obtained or announced an equity interest investment in a major infrastructure project between the start of 2022 and April, 2024, according to a report from law firm Fasken Martineau DuMoulin LLP. Of the 135 energy and related infrastructure projects that were partially or wholly purchased by Indigenous communities over the past 15 years, the report found 28 per cent of those investments occurred just in the past two years.

In a commentary released on Sept. 30 to coincide with Canada’s National Day for Truth and Reconciliation, credit rating agency Morningstar DBRS cited “significant growth potential for Indigenous-related financings in the coming years.”

As Indigenous-led capital-markets institutions expand, their success helps to ensure the process of economic reconciliation is led by Indigenous Canadians themselves.

“Self-determination is saying it is great that you have found a way to help us with some economic reconciliation, but we are taking control of it now and we are going to move that ball forward in a way that makes sense to us,” Bill Lomax, CEO of the First Nations Bank of Canada, said in an interview from his office in Saskatoon. “Economic reconciliation is not really economic reconciliation if it is imposed on you or if you have to do it the way other people want it done. So, there have to be mechanisms like these institutions.”

The bank plans to launch institutional wealth-management services in late 2025 that will help First Nations manage the tens of billions of dollars in settlements that have been reached with various levels of government over the past two years (and others that are still being negotiated).

“It is very similar to the kind of work I did when I was at Goldman Sachs. We were in the business of building mini-sovereign-wealth funds for nations in the U.S.,” he said. “We are just really starting to get to that same place where they were 20 years ago. It is a scary place to be, as well, because you don’t want to get it wrong; but it is an opportunity to start moving forward.”

One big bottleneck in the path forward is the fact that Indigenous Canadians, under the federal Indian Act, do not own their land. Because reserves are technically Crown land that has been designated for Indigenous use, those communities have very little collateral to pledge for loans. As a result, many of them often struggle to access loans with reasonable interest rates for major investments.

A decade ago, when a group of 15 First Nations in British Columbia were offered the opportunity to buy 30 per cent of a $5-billion natural gas pipeline project going through their territories, that struggle was on full display.

The First Nations Major Projects Coalition, which had just been established in 2015, contacted approximately 70 institutional investors to seek financing, but the borrowing rates the First Nations were offered ranged from 12 per cent to 15 per cent a year. Given that the expected annual return from the pipeline project was between 8 per cent and 10 per cent, the group had to abandon its efforts to acquire an ownership stake in the project.

Since that time, however, the coalition has grown from a few dozen members to 175 elected councils, hereditary chiefs, tribal councils and development corporations that represent roughly one-third of all Indigenous nations in Canada. Its members have so far purchased equity stakes or started investment discussions in 19 infrastructure projects across the country that are collectively worth more than $45-billion.

And coalition members believe they have found a solution in the form of a federal loan guarantee program. That program, which is currently being developed by the Canada Development Investment Corporation (CDEV), would allow financial institutions to issue loans to Indigenous governments at interest rates comparable to those that have long been available to other public entities in Canada by having the federal government guarantee the borrowed funds.

The coalition estimates Indigenous communities will need access to $585-billion over the next 20 years to meet the demand for projects at various stages of development on their lands. While Ottawa’s loan guarantee program is expected to total just $5-billion, Mark Podlasly, the coalition’s chief sustainability officer, says it would be a good start.

When then-finance minister Chrystia Freeland promised that Ottawa would finally deliver the long-requested loan guarantee program at the coalition’s most recent conference in April, 2024, “it was a rapturous response,” Mr. Podlasly recalled. “People were thrilled because this is the one issue that always blocks us from being able to co-invest in these projects.”

“The coalition members are not asking for a handout. They are asking for creative solutions to get around these policy barriers,” he said. “Once that bottleneck is relieved, you will start to see the returns will then flow to the nations and to the project proponents and to the Canadian taxpayer. We see it as all coming down to being able to make those co-investments, to getting access to capital, to getting over that hump.”

Russ Wenman, head of execution and advisory for CDEV, declined to comment on when the program would be ready.

Lisa Raitt, a former federal cabinet minister under then-prime minister Stephen Harper, is now vice-chair of global investment banking at the Canadian Imperial Bank of Commerce, and she expects the loan guarantee program launch to be announced soon.

“I am extremely optimistic that you will be seeing announcements coming out in the near future, and my answer there is political in nature because this government needs a win before the next election,” Ms. Raitt said. “There is going to be pressure from Ottawa on CDEV to get something out the door.”

Finding someone to run the program, however, could prove challenging.

“I wouldn’t want to be in the federal government’s position on this now,” Jaimie Lickers, CIBC’s senior vice-president of Indigenous markets, said in an interview. “I know the recruitment process is under way for a candidate to lead the program at CDEV. That is not going to be an easy job for them to find someone who is both capable and skilled on the actual program and everything that goes along with financing major projects, but also someone who is credible in the Indigenous community.”

“The pool is not that large to choose this person,” she said.

Until the new federal program is established, smaller, more specialized programs are making progress. The Alberta Indigenous Opportunities Corp., for example, was established in 2019 and can provide up to $3-billion in loan guarantees. The range for a loan guarantee for a single, qualified project is a minimum of $20-million up to $250-million.

And in November, 2023, the Canada Infrastructure Bank unveiled a new program that would loan money directly to Indigenous communities to buy ownership stakes in projects that the bank was already financing. That program made its first loan in February, 2024, of up to $18-million to a group of 13 Mi’kmaq communities in Nova Scotia for them to invest in a battery-storage project being developed by Nova Scotia Power Inc.

“That was our first, but right now there are active procurements for new renewables projects in British Columbia, Saskatchewan, Nova Scotia and New Brunswick,” Ehren Cory, CEO of the Canada Infrastructure Bank, said in an interview, “The bids have been coming in on those and every bid has meaningful Indigenous ownership of between 25 and 50 per cent, usually based on our loan.”

He sees the establishment of Cedar Leaf and other Indigenous-led capital markets organizations as “just scratching the surface of the potential” for Indigenous communities to finally obtain affordable access to financing.

“We are at the beginning of this upswing, this constellation is coming together and there is real momentum that never existed before,” Mr. Cory said.

Because of that momentum, the distance that has long existed between the Indigenous community and the financial community has finally started to shrink.

“You are now finding a whole layer in the middle, the Cedar Leafs, that are necessary, absolutely critical,” he said. “What they are solving is a market failure, a market failure of understanding, where you’d hope that you get to a place where a deal with an Indigenous community will be no different than giving a loan to the City of Medicine Hat or Calgary or Toronto.”

Issuing loans to Indigenous communities in exactly the same manner as Canada’s largest cities borrow money is exactly the mission of First Nations Finance Authority.

Modelled off of the Municipal Finance Authority of B.C., FNFA functions much like a provincial government by issuing debentures (a type of bond) to finance infrastructure “It took us six years to get to $1-billion, another two years to reach $2-billion and it is going to take us only one year to get to $3-billion,” FNFA CEO Ernie Daniels said. (FNFA surpassed the $3-billion threshold in total financing to First Nations in Canada in early December, 2024).

“We are the only pool borrowing model for First Nations governments in the world that exists. We have other countries that want to mimic what we are doing because of the success that we have had – Australia and New Zealand in particular,” he said.

Investors around the world are buying FNFA debentures, including central banks in Europe and Asia, Mr. Daniels said. The debentures have AA ratings from S&P Global Ratings, Moody’s Ratings and Morningstar DBRS, meaning they offer a similar risk profile to bonds issued by the Ontario government.

The proceeds from the debentures are then used to finance loans to individual communities under the Indian Act, with fixed interest rates and terms as long as 30 years. For context, the current interest rate on 10-year loans is roughly 4 per cent.

Before FNFA existed, Mr. Daniels said Indigenous communities looking to borrow money were forced to pay interest rates of 10 per cent or more during periods when rates generally were at historic lows.

Loans made by FNFA are used for a variety of purposes, from infrastructure to social and governance investments. One community in Manitoba used an FNFA loan to buy real estate in Winnipeg.

“They built student housing there so their young people could go and stay there while they go to university,” Mr. Daniels said.

The authority’s highest-profile deal to date was a $250-million loan to a coalition of Mi’kmaq First Nations in Nova Scotia and Newfoundland and Labrador that allowed them to purchase 50 per cent of Clearwater Seafoods in 2020. But it is often the smaller loans that have had the largest impact on individual communities.

Perhaps the best example of that is school construction.

“Schools are really the responsibility of the federal government, but because of the current funding models in Canada some nations would have to wait 70, 80 or 100 years before they get a school,” Mr. Daniels said.

In the decade that FNFA has issued debentures, its loans have supported the building of four new schools: Chief Kahkewistahaw Community School in Kahkewistahaw First Nation of Saskatchewan, Maupeltuewey Kina’matno’kuom in Membertou First Nation of Nova Scotia, Chief Crowfoot School in the Siksika Nation of Alberta and the Mistawasis Nehiyawak School in Mistawasis First Nation of Saskatchewan.

While guarantee programs and FNFA loans serve communities, there are also rapidly expanding resources to help Indigenous-owned private businesses and entrepreneurs.

Three years ago, the National Aboriginal Capital Corporations Association (NACCA) – an industry group for Indigenous financial institutions across Canada – launched a $150-million Indigenous Growth Fund. Similar to a private debt venture capital fund, the IGF has so far funded $75-million in loans to more than 300 Indigenous businesses, which run the gamut from an oyster farm on Vancouver Island, to various construction-related businesses, to a bakery in Duncan, B.C.

“When we launched the IGF we were at average loan sizes of about $80,000 and that has crept up to about $100,000. And those accessing the IGF specifically have at times doubled the average loan size,” said Frank Richter, the fund’s managing director. “We are seeing more and more demand from the business community for financing.”

NACCA is also planning another $150-million fund to help finance mortgages on First Nations reserves and has no plans to stop there.

“We are just at the very beginning of a lot of different funds being created and new entities being created,” said Shannin Metatawabin, CEO of NACCA. “We are under capacity right now and there is room for additional funds and additional players. I think we are just at the very beginning of that taking place.”

Kamloops-based All Nations Trust Co. (ANTCO) – a NACCA member – signed a partnership in November with the Bank of Montreal that will allow businesses owned by any of the 121 Indigenous communities the financial institution serves to access significantly enhanced financial resources.

“Right now, ANTCO offers smaller-sized loans, forgivable loans and other types of funding, but by partnering with BMO, they now have access to the ability to do larger-sized loans,” said Clio Straram, head of BMO’s Indigenous banking unit. “The example I use when I talk about it is ANTCO could easily do a $250,000 loan and BMO could easily do a $10-million loan, and we could basically syndicate the loan and do a co-lending agreement.”

BMO’s Indigenous banking unit has been one of the bank’s fastest-growing lines of business, with revenues rising at a compound annual rate in the double digits since the unit was established in 1992.

“And our growth has been a byproduct of the growth of the communities,” said Mike Bonner, head of Canadian personal and business banking at BMO and co-chair of the bank’s Indigenous Advisory Council.

The best way to demonstrate the rise of Indigenous-owned businesses is to track the meteoric rise in membership at the Canadian Council for Indigenous Businesses. When Clint Davis was the organization’s CEO from 2008 through 2012, he remembers surpassing 100 members as a major cause for celebration.

Today, CCIB membership stands at 2,743, with more than 700 of them joining in 2024 alone.

“There is momentum and change happening,” said Tabatha Bull, who became CEO of the CCIB in March, 2020, when membership stood at roughly 1,000. “For sure there is a lot left to do but we are on the right path.”

Roughly one-third of CCIB members are non-Indigenous, Ms. Bull said, and join the organization to foster better relations with Indigenous communities, establish connections with Indigenous suppliers and contractors, and recruit more Indigenous talent.

The number of businesses that have signed on to the CCIB’s Partnership Accreditation in Indigenous Relations (PAIR) has gone from less than 100 five years ago to more than 250 today, Ms. Bull said.

Despite all the recent progress, much work still needs to be done, especially on the issues of basic infrastructure on Indigenous lands and the lack of representation of Indigenous people in the banking and financial services sector.

“How can a business be run in a community without clean water or broadband? We need to have all of that infrastructure to be able to build businesses,” said Ms. Bull. “We have a long way to go still. [There are] significant socioeconomic gaps between Indigenous and non-Indigenous people in this country.”

That is even true of Indigenous Canadians working in the banking and financial services sector. According to 2022 data from Employment and Social Development Canada, Indigenous peoples’ average hourly pay was 9.9 per cent less than non-Indigenous people in the sector.

And while the total number of Indigenous people employed in banking and financial services nearly doubled over 20 years – from 2,086 in 2002 to 3,913 in 2022 – they continue to account for a tiny proportion of the sector’s overall work force. Just 1.4 per cent of people employed in Canadian banking and financial services identified as Indigenous, even though 1.7 per cent of people available for hire in that sector identified as Indigenous.

Bank of Nova Scotia believes Cedar Leaf, with its goal of hiring as many Indigenous employees as possible, can help close that gap.

“One of my failures as a leader in diversity has been the hiring of Indigenous peoples,” said Paul Scurfield, Scotiabank’s executive vice-president of global capital markets. “If I look at it, I haven’t seen the pipeline come through. So now, instead of complaining about the lack of a pipeline, we are helping to create the pipeline.”

The bank helped launch Cedar Leaf and still owns 30 per cent of the business. But Loretta Marcoccia, Scotiabank’s chief global operations officer and chair of Cedar Leaf’s board of directors, said the bank plans to divest its stake within the next three years.

“If this is done right, and we think we have done this right, once Cedar Leaf is completely independent, it is going to change the face of what we think capital markets looks like,” Ms. Marcoccia said.

The progress achieved over the past decade has been undeniable and Cedar Leaf specifically has already landed two major deals: joining the dealer syndicate for Canada Pension Plan Investment Board and the bond underwriting syndicate for the government of Alberta. But Mr. Davis said much more work still needs to be done before the face of Canadian capital markets will truly start to look different.

“I think we are still behind,” Mr. Davis said. “Even though we have a remarkable growth of Indigenous entrepreneurialism, we are still embarking upon the first-that-exists in industries, including Cedar Leaf.”

Indigenous equity investments

• US$4-billion Cedar LNG terminal in Kitimat, B.C., that is majority-owned by the Haisla Nation and 49.9 per cent owned by Pembina Pipeline Corp.
• $1-billion deal for TC Energy Corp. to sell a stake in its Western Canadian gas transmission network to a consortium of 72 Indigenous communities in three provinces. The deal hit a recent snag but is still potentially among the largest Indigenous equity agreements in Canadian history
• $250-million deal for a group of Mi’kmaq First Nations to acquire half of Clearwater Seafoods Inc.
• $200-million Tu Deh-Kah Geothermal project in B.C. that is fully owned by the Fort Nelson First Nation
• $7-billion LNG project in Newfoundland with 5-per-cent stake going to the Miawpukek First Nation
• Two First Nations in Southern Ontario purchased a 50-per-cent stake in Hydro One’s Chatham to Lakeshore transmission line
• $18-million loan from the Canada Infrastructure Bank to a group of 13 Mi’kmaq communities in Nova Scotia to invest in a battery-storage project that Nova Scotia Power is developing
• $20-million convertible note deal from the Taykwa Tagamou Nation, a Cree First Nation in the Cochrane District of Northern Ontario, to help develop Canada Nickel Co. Inc.’s Crawford nickel-cobalt project near Timmins, Ont.
• $1.1-billion deal for a consortium of 23 First Nation and Métis communities in the Athabasca region of northern Alberta to acquire an 11.57-per-cent non-operating interest in seven pipelines operated by Enbridge Inc.
• $93-million for a consortium of six First Nations to buy an equity stake in the $1.5-billion Cascade Power Project near Edson, Alta. The natural gas-fuelled plant commenced operations in 2024 and has the capacity to provide more than 8 per cent of Alberta’s average electricity demand

Photo: The shared learning hall at Chief Kahkewistahaw Community School in Kahkewistahaw First Nation of Saskatchewan. The school and three others across Canada were built with loans from the First Nations Finance Authority, which functions much like a provincial government by issuing debentures to finance infrastructure projects for the communities under its purview. Jamie Woytiuk/The Globe and Mail