The case studies highlighted here are representative of Fiera Capital’s expanding suite of private alternative strategies – a compelling combination of distinctive assets and innovative solutions that offer investors increased diversity as well as the potential for higher growth, higher yields, enhanced absolute returns and reduced volatility.
When Conterra Networks – one of the largest independent fibre bandwidth providers in the United States – was seeking to recapitalize, Fiera Infrastructure stepped up to the plate. Our purchase of an equity interest in Conterra provided existing shareholders with increased equity, and we are working together with the management team to continue growing the network.
Conterra Networks is one of the largest independent fibre bandwidth providers in the United States. Its network spans more than 20 states in the Southeast, South Central and Western U.S.
Conterra specializes in the design, deployment and operation of customized broadband networks, largely in underserved areas. Conterra’s 11,600-route mile fibre network brings high-capacity middle and last-mile broadband services to enterprise, carrier and education customers.
Fiera Infrastructure purchased an equity interest in Conterra from Court Square Capital Partners and the company’s existing management. The transaction, which closed in April 2019, was part of a recapitalization to provide existing shareholders with liquidity. Both Court Square and the existing management team are working with Fiera Infrastructure to continue growing Conterra’s network.
Conterra is a provider of critical infrastructure: global IP traffic and mobile data are growing at compounded annual growth rates (CAGR) of 45% and 27%, respectively. Fibre is the only sustainable technology able to meet the increasing bandwidth demand. Other key attributes include:
- Geographic diversification - Conterra is one of the largest independent fibre platforms and serves over 35 metro areas across 21 states.
- Focused approach – Its focus is on segments of the market with less competition and highly attractive growth demographics.
- High-quality customers - Conterra’s largest customers consist mainly of public sector entities and major carriers.
- Stable Cash Flows – Majority of revenue is recurring, on a monthly basis.
Environmental, social and governance (ESG) considerations are constantly top of mind with respect to Fiera Infrastructure’s investment-sourcing process. Nothing exemplifies this approach more than our firm’s June 2018 investment in Cory Riverside Energy, the largest energy-from-waste facility in the United Kingdom. Cory processes some 750,000 tonnes of London’s household and commercial waste each year, transforming it into electricity, metals and construction aggregates.
Environmental, Social and Governance (ESG) considerations are constantly top of mind with respect to Fiera Infrastructure’s investment-sourcing process. Nothing exemplifies this approach more than Fiera Infrastructure’s June 2018 investment in Cory Riverside Energy, the largest energy-from-waste facility in the United Kingdom.
Cory is one of the UK’s leading resource-management, recycling and energy-recovery companies, annually processing some 750,000 tons of London’s household and commercial waste, transforming it into electricity, metals and construction aggregates. The facility generates approximately 525,000 MWh of electricity per year.
Cory Riverside Energy is a high-quality asset that we believe will deliver stable and recurring cash flows to investors. The waste-to-energy market is an exhilarating sector to invest in, given its long-term growth prospects and the broader trend towards creation of a ‘circular economy’. Among Cory’s many attributes:
- The power plant is exceptionally efficient, boasting an energy-efficiency factor of 0.81, which exceeds the threshold (0.65) for being considered environmentally-efficient.
- As well as being eco-conscious by definition, the facility has consistently operated well below applicable regulatory emission limits and is already prepared to conform with stricter emissions limits going forward.
- Unique to the Cory facility is that it leverages the River Thames as a ‘green highway’, utilizing a fleet of tugs and barges to transport waste to the plant – thereby removing around 100,000 truck movements a year from congested London-area roads.
Kinectrics Inc., formerly part of Ontario Hydro, is a leading provider of life-cycle- management solutions to the nuclear and electric utilities industries. Fiera Private Debt recently financed the acquisition of Amec Foster Wheeler Americas Nuclear, enabling Kinectrics to expand its market share, while broadening its range of services and geographic footprint.
Kinectrics Inc., formerly part of Ontario Hydro, is a leading provider of life- cycle-management solutions to the nuclear and electric utilities industries. It offers comprehensive engineering services to help design and implement new technologies for power-generation, transmission, distribution and environmental applications.
Kinectrics also provides clients with independent testing and inspection services for many types of nuclear and electrical equipment, as well as certification and qualification of new parts band materials for power plants or transmission components.
Fiera Private Debt had previously financed Kinectrics’ acquisition by management from a private equity investor.
More recently, Fiera Private Debt financed the acquisition of Amec Foster Wheeler Americas Nuclear:
- This financing enabling Kinectrics to expand its market share, while broadening its range of services and geographic footprint.
Fiera Comox Agriculture’s acquisition of some 4,500 acres of prime agricultural land in California – which more than 3,800 acres are configured for almond production – is reflective of our on-going commitment to building a diversified global portfolio of assets, primarily farmland, that will aim to generate stable, attractive returns for investors over the long-term, with low correlation to most other asset classes.
The asset consists primarily of some 4,500 acres of prime agricultural land in California, of which more than 3,800 acres are configured for almond production. The operations are vertically integrated, with their own management, equipment, grading, packing, and marketing capabilities.
Fiera Comox’s local operating partner has a strong management team that has developed thousands of acres of almond orchards over the past decade and possesses a wealth of expertise throughout the value chain.
Consumption of tree nuts, especially almonds, is growing globally, thanks largely to changing diets in developing regions, particularly Asia, which are pushing up demand. Although almonds are sold domestically in the United States, the vast majority of production is exported to various markets, including China, Japan, and Western Europe. Other noteworthy aspects of this investment:
- Established operations and track record in specialty permanent crops.
- Assets are positioned for the long-term given the reliability of its water supply.
- Almonds and other specialty permanent crops offer attractive cash yields with low correlation to most other asset classes.
Class A industrial real-estate is a sought-after commodity in today’s marketplace, and for good reason – potential for compelling returns along with a hedge against inflation. A prime example is Fiera Real Estate’s opportunistic, value-add investment to design and build a new single-tenant, 550,000-square-foot distribution facility on Mobis Drive in the northern portion of the GTA.
This investment involved the design-build of a new single-tenant, Class A industrial distribution facility encompassing some 550,000 square feet, situated at 10 Mobis Drive in the northern portion of the Greater Toronto Area (GTA).
The facility was pre-leased on a 15-year term to an investment-grade tenant, Mobis Parts Canada, which is the Korean-based automaker Hyundai’s parts-distribution operation.
This investment reflects Fiera Real Estate’s strategy of partnering with leading local developers to identify and execute new-development initiatives that aim for higher returns:
- Total project costs amounted to $69 million ($126 per square foot).
- Fiera Real Estate also cemented an on-going relationship with a reputable developer who maintains a 20% interest in the Mobis warehouse.
A recently completed, mixed-use development in downtown Montreal, financed by Fiera Real Estate, underscores how well-conceived and executed real-estate investments can deliver compelling returns to investors. Project costs totalled $140 million for the development, which included three residential condominium phases plus a 294-unit rental apartment building, and also incorporated an existing historic building on the site.
Situated at 1800 René-Levesque Blvd. in downtown Montreal, within walking distance of the central business district and two major universities, the development includes three residential condominium phases totaling 286 units plus a 294-unit rental apartment building.
The project site included a heritage building that required preserving – an undertaking very much in keeping with Fiera Capital’s and Fiera Real Estate’s strong commitment to integrating environmental, social and governance (ESG) considerations into its investment strategies and initiatives. The building in question was made a central part of the development’s masterplan, by integrating a variety of resident services and amenities into the restored edifice.
This transaction illustrates how our team of experienced real- estate practitioners can successfully execute a well-conceived, opportunistic strategy that seeks to generate superior returns for investors. Consider these key facts and figures:
- Project costs including land totalled $140 million.
When Thornhill Investments Inc. required financing to expand its engineering and consulting operations through a strategic acquisition, Fiera Private Debt provided the solution – $12 million over 24 months. The interim financing not only facilitated the acquisition, but also helped preserve hundreds of jobs at the merged enterprise, now known as FNX-Innov.
In November 2018, Thornhill Investments Inc., owned by a group of investors and operators, acquired S.M. Group International Inc. (SMi), now known as FNX- Innov. FNX-Innov specializes in service delivery related to the engineering and environmental sectors as well as project management, in markets around the world.
Thornhill Investments Inc. intends to leverage its expertise in consulting services to grow and optimize the value of the company.
Fiera Private Lending provided Thornhill Investments with $12 million over 24 months to support the SMi acquisition.
- This interim financing enabled Thornhill and the former S.M. Group to pool their expertise and expand their presence in the engineering and construction industries.
- Crucially, the transaction also preserved hundreds of jobs.
Project financing from Fiera Private Debt enabled development by TUGLIQ Energy of a second 3 MW wind turbine and a large-scale energy storage installation (“Raglan 2”) at the Glencore Raglan Mine, situated in the remote northern limits of Quebec. The transaction also included the refinancing of the sponsor’s original 3 MW wind- turbine project (“Raglan 1”) completed at the end of 2018. The Raglan project has been widely acknowledged as an engineering feat – an autonomous, industrial-scale micro grid set down in a hostile Arctic environment to provide a reliable source of renewable energy.
TUGLIQ Energy was seeking project financing for the development of a second 3 MW wind turbine and a large-scale 3 MW/1MWh storage installation (“Raglan 2”) at the Glencore Raglan Mine – one of the richest base-metal mines in the world, situated in the Canadian Arctic at the extreme northern limits of Quebec. The transaction also included the refinancing of the sponsor’s original 3 MW wind-turbine project
(“Raglan 1”), which was completed at the end of 2018.
The Raglan I project was a first of its kind, an autonomous, industrial-scale micro grid set down in Arctic Canada. Previously, the Raglan Mine power grid was 100% diesel- dependent. TUGLIQ’s renewable-energy solution enabled the mine’s operator to diversify is energy sources, significantly reduce greenhouse gas emissions, and benefit from long-term energy cost reductions directly related to the displacement of diesel- fired power generation.
The engineering feat represented by the successful installation of an autonomous, renewable industrial-scale micro power grid in the hostile Arctic environment was recognized at the 2019 edition of the annual Mercuriade awards, organized by the Fédération des chambres de commerce du Québec, where the Raglan Mine was honoured for the most outstanding Sustainable Development Strategy (large enterprise). Among the many benefits of this project:
- With Raglan 2 up and running, the expanded, two-turbine configuration is expected to displace up to 4.2 million litres of diesel annually.
- Renewable energy penetration at the site is anticipated to reach close to 40%.
- The new energy-storage and control systems that are part of Raglan 2 will play a critical role in managing variations due to wind fluctuations, as well as preventing grid failure in the event of turbine malfunctions.