Fledgling Native Investment Firm Focuses on Good Profit Picture
Several Canadian native business groups are now recognizing their financial clout
ROCKETS and soda pop.
These are the foundation stones of a fledgling native investment firm in Manitoba, where Indian leaders have pooled resources to see their money grow - fast.
The partnership, like native groups and communities across Canada, is primed for growth and is awakening to its financial clout. Several native business groups have gotten a boost from land-claim settlements. And, though still in their early stages, there is anecdotal evidence that native investments are beginning to take off.
In northern Quebec, the Cree are operating airlines, construction, and other companies. There are numerous isolated operations, including a native-financed marina/apartment complex in British Columbia, a native mutual-fund company, and, in Manitoba, a 100-percent native-owned soda-pop bottling firm.
The soda-pop operation, Arctic Beverage Group, is the flagship investment of the Tribal Council Investment Group, a partnership of 53 Manitoba tribes. With just $175,000 (Canadian; US$125,962), TCIG was established in 1990 to make long-term investments in service-oriented businesses with good profit pictures.
The only problem: Nobody had heard of TCIG, and the first companies approached were skeptical. ``We decided right at the outset that ... we had to go out into the market and make an investment in a winner,'' says Marvin Tiller, the nonnative chief executive officer. As former CEO of a chain of stores supplying Arctic and northern communities, he visited most native communities in Canada's North. It gave him, he says, an understanding of native priorities and a working relationship with native groups.
Under pressure to deliver, Mr. Tiller chose Arctic Beverage Group to be TCIG's first acquisition. It took more than a year, but TCIG lined up a highly leveraged TCIG bank-and government-financed buyout of Arctic Beverage.
From its state-of-the-art plant in Flin Flon, Arctic Beverage Group battles private-label brands and wrestles with a distribution system that sends soda by sea, air, and truck across the snowy tundra of northern Canada, over frozen lakes known as ``winter roads.''
Arctic Beverage was worth the undisclosed price, Tiller says, because the soda-pop bottler holds the Pepsi-7-Up franchise for much of northern Canada. The company was of particular interest because most customers are natives.
But for every rule about ``conservative'' investing, there is an exception. Tiller admits that a high-flying plan to launch rockets from Churchill, Manitoba, was just the kind of high-tech, high-risk venture TCIG had planned to avoid.
A partnership deal this January gives TCIG a 20 percent stake and seat on the board of the Churchill Rocket Range. The trend toward smaller, less-expensive satellites has made Churchill and about six other sites around the world attractive as low-cost launch centers, Tiller says.
Its history of launching sounding rockets, a sea port, rail line, and air strip works in favor of Churchill as a launch site. Two advantages are that it is away from dense civilian populations, and its far-north location is in sync with the ``Arctic orbit'' desired for most communications satellites.
Tiller says TCIG is now weighing about half a dozen much more conservative investments, including a Winnipeg hotel, office building, data-processing company, and boot and shoe manufacturer. He says he expects to conclude two more deals this year.
TCIG is overseen by native directors. But so far, it remains a lean operation with just Tiller and his Cree-Ojibway prot and assistant, Allan McLeod, running the show. But size didn't matter to bottom-line-oriented Tiller. ``We made it a priority to first go out and get a good solid company,'' he says, ``rather than starting up an office and, at the end of the day, having a lot of fluff and whipped cream, but no company.''
Mr. McLeod is a young, strapping former hockey star who has a business degree and is working on his master's. He makes no bones about having his sights set on someday holding Tiller's job. ``The reality of aboriginal wealth is that the groups are coming together to do stuff faster and smarter and without government help,'' he says. ``They're really getting organized, finally, and jumping into the mainstream.''