ATTRACTING INVESTMENT

• Access to Capital is Critical to any Business Activity

• Accessing Capital is Often More Difficult for Aboriginal Business

• Accessing Capital for Fisheries is Limited; More so For Aboriginal Fishing Activity

• Need to Establish Favourable Conditions for Attracting Investment in Aboriginal Fisheries

ATTRACTING INVESTMENT

• SCOPE of DEMAND

• BARRIERS to CAPITAL

• OPTIONS

ACCESS TO CAPITAL

Vessel Replacement Large vessels (> 100ft) 2/3 $40 -$60 M Mid-shore (50 – 75 ft) 40/50 $60 -$75 M Inshore (40 – 50ft) 200/250 $60 -$75 M

Total $160 - $210M

SCOPE OF DEMAND

New Access (Licenses and Quota) $100 M + Aquaculture $35 M + Other Fisheries Activity TBD - Processing - Marketing - Service Sector Vessel Construction/Repair Equipment/Gear Unloading/Transportation Monitoring Training

SCOPE OF DEMAND

Historic Reluctance of Capital Markets to Large Exposure in Fisheries

• Boom/Bust Cycles • Export Based/Market Price Takers • Slow Adjustment of Capital/Labour • Three Major Government Adjustments in the Past 30 Years • Provincial Competition for Raw Material for Processing Sector • Largely Seasonal Activity

BARRIERS TO CAPITAL

Licenses not Property

• East Coast Licenses Held by Individuals • West Coast Licenses Vessel or Quota Based • Controlling Agreements (Transfer of Beneficial Interest) and Vessel/ Quota Leasing Have Emerged Over the Past 30 Years • Transactional Costs Higher Than Normal • Recent Court Decisions (Saulnier) Offer Some Protection for Commercial Lenders

BARRIERS TO CAPITAL

Corporate History

• Communal Licenses • Collateral • Business History/Governance • Revenue Stream • Workforce training

BARRIERS TO CAPITAL

Aquaculture

• Start up Capital • Working Capital

Depending on product mix, it may take 18 months to 84 months to generate revenue flow.

BARRIERS TO CAPITAL

• Fund through Capital Market • Fund Directly Through Programs • Fund through AFI’s • Fund through Provincial Lending Agencies • Address through Treaty Processes • Create License Banks or Equity Pools • Partnerships • Combination of the above

OPTIONS

Sufficient Revenue Stream

• Productivity: Training/Skills Development • Financial Management • Collective Risk (License Banks, Equity Pool or Equity Investor)

FAVOURABLE CONDITIONS FOR INVESTMENT

Proper Business Planning

• Data/Information Management System • Long Term (15 yr +) Investment Strategy • Business Development – Management - Administrative Skills

FAVOURABLE CONDITIONS FOR INVESTMENT

Effective Governance

• Effective Management Control/Decision Making • Long Term (15 yr +) Planning Horizon • First Nation Support to Local Management Authorities • Coordination Across First Nations; Creating Harvesting Efficiencies (Economies of Scale in Vessel Repair, Maintenance, Equipment Purchase, etc ), Processing and Marketing, Pooling of Risk to Access Capital.

FAVOURABLE CONDITIONS FOR INVESTMENT

Common Elements

• Human Capital (Training/Skills Development) • Business Planning/Investment Protocols • Governance (Decision Making/Policy Consistency)

ATTRACTING INVESTMENT

COMMENTS AND OBSERVATIONS