At the Bay Street private equity firm, it’s known as the Ontario-focused investment fund.
Inspired by a powerful demographic trend, Arch Corporation’s current venture aims to “generate stable long-term cash returns.”
The fund has already attracted $7.5 million from a Canadian “ultra high net worth family office” and another $25 million from “one of the largest, independent family-owned multinationals in the GCC” — an apparent reference to an economic alliance of Middle Eastern nations including the United Arab Emirates and Saudi Arabia.
What provincial industry is captivating exclusive investors?
Earlier this year, as the pandemic began its global surge, Arch Venture Holdings and its partner, DTOC II Long Term Care, won Ontario government approvals to buy ministry bed licences for seven nursing homes they had previously invested in.
“The Ontario government has embarked on an aggressive redevelopment of 30,000 beds over the next 8 years, in which Arch intends to participate,” Arch Corporation’s website said, referring to the Ministry of Long-Term Care expansion of the nursing home sector.
While companies such as Chartwell or Revera have for years dominated the private sector of long-term care in Ontario, owning and operating dozens of homes, a new type of corporate ownership has emerged: private companies, like Arch, that buy homes and hire outside management firms to provide the day-to-day care of medically fragile seniors.
Seniors’ housing — retirement homes, assisted-living apartments and long-term care — has long held an allure for investors who see opportunity in demographics.
The first wave of the massive boomer generation turns 75 next year and the number of Canadians over 85 is expected to triple in roughly 20 years.
As private investment in nursing homes continues, seniors’ advocates argue against the generation of profit from residents with serious health problems, saying that business-focused homes cut costs by using part-time staff, rationing products or scrimping on laundry services.
Two for-profit insiders say the pandemic has forced a reckoning for some private long-term-care companies, with immense pressure to focus on care instead of the bottom line.
“The issue that we have to grapple with is, what are we designing long-term care to achieve?” said Laura Tamblyn Watts, CEO of national seniors’ organization CanAge.
“You can’t blame private equity for doing what private equity does, which is squeeze every single dollar out of what they invest. But that is not what we want for residents in long-term care. And that is the critical problem.”
Michael Missaghie, Arch Corporation president, told the Star his company will provide “resident-centred” care and uphold government regulations in the homes it bought this year, which include locations in Windsor, Leamington and Niagara-on-the-Lake. They range in size from roughly 55 to 124 residents.
“We see the sector as an attractive investment for many reasons, including … growth potential based on the needs of an aging population,” Missaghie said in an email.
“We want to be a meaningful and net positive part of the many communities where we currently have and intend to develop long-term-care facilities in the province.”
Arch Corporation did not seek government development money for new construction, although its home purchases come at a time of great expansion in Ontario, with the long-term-care ministry offering $1.75 billion to help operators renovate old buildings or build anew.
On Nov. 3, Ontario announced the sale of 23 “developable” acres of surplus government land in Oakville, Vaughan and Aurora for long-term-care homes that would care for 896 residents.
In its call for bids, CBRE, the broker-of-record working with Infrastructure Ontario, called the sale “a rare opportunity to acquire a premier portfolio of three separate development land parcels located across the Greater Toronto Area.”
It’s also a time of uncertainty.
Some insurance companies are refusing to provide long-term-care homes with liability coverage against COVID-19 and a long list of infectious illnesses such as Legionnaires Disease or certain strains of flu. Ontario’s legislative attempt to protect homes from lawsuits related to COVID doesn’t include the other infectious diseases, said Lisa Levin, CEO of Advantage Ontario, which represents not-for-profit and municipal homes.
Non-profit and for-profit homes need liability insurance to operate, Levin said.
Levin said the insurance is also needed to qualify for loans from lenders to fund construction, as provincial subsidies arrive only after the first resident moves into the home.
“It’s an existential issue,” added Donna Duncan, CEO of the Ontario Long Term Care Association. “The message we are hearing is that long-term care is uninsurable.”
Arch won approval to buy bed licences for three homes in January and four more in April after passing government eligibility requirements, including the “Minister’s Public Interest Tests,” which can look at a region’s balance between for-profit and not-for-profit homes, a ministry spokesperson said.
The homes Arch purchased, including Regency Park in Windsor, reported limited, if any, COVID cases and so far, according to the Ministry of Health, no resident deaths.
The company’s proposals to buy those 299 bed licences from four Chartwell homes and 251 beds from three homes owned by Meritas Care Corporation were posted on Ontario’s long-term-care licensing public consultation registry.
After selling licences for four of its homes to Arch, Chartwell said it now owns 19 nursing homes and manages four, with the majority of its business in private-paid retirement homes.
Arch’s website describes its “Senior Care Co-ownership Fund,” as a “direct investment opportunity” to develop nursing homes and privately paid retirement homes. The fund is “solely focused on the province of Ontario.”
Arch has plans for $100 million of equity in the fund, and at its “initial closing — as of June 30, 2018 — (had) $58 million committed,” the website said. That figure includes the $25 million from the family-owned multinational in the GCC. The GCC is known among investors as the Gulf Cooperation Council. Missaghie would not confirm this, citing private company information. The GCC represents six countries in the Arab Peninsula.
Arch has a plan to acquire roughly 850 to 1,000 long-term-care beds, the website said.
Until Ontario’s recent announcement of $1.75 billion for renovations and new builds, there hadn’t been any significant government funding for new long-term-care construction since the late 1990s.
The majority of current proposals for bed licence acquisitions (sometimes existing home licences are transferred between companies under the same corporate umbrella) and redevelopment money are from private owners, many of whom still operate old, small homes where infection is tough to control.
Dr. Nathan Stall, a geriatrician with Mount Sinai hospital, worked on a study published in the summer that found for-profit homes, often within larger chains, had more COVID infections and deaths.
He also worked on a recent study that examined reasons for the spread. It concluded that crowded homes (with shared rooms, narrow hallways and old ventilation) “were more likely to experience larger and deadlier COVID-19 outbreaks.
“It’s not as simple as saying all for-profit is bad and all non-profit is good,” he said.
Arch did not say how it plans to run its homes moving forward, but Health Ministry inspection reports show it currently uses companies such as Responsive Group or Universal Care to manage its homes.
Privately held firm Southbridge Care Homes has long used Extendicare Assist to manage its 27 nursing homes, though Candace Chartier, the company’s newly appointed “chief seniors’ advocate and strategic partnerships officer,” said its management style is changing.
At Southbridge’s Pickering home, Orchard Villa, where 70 residents died of COVID in the first wave, the company in September started a new model of “direct oversight of front-line care and services,” Chartier said. Timing on installing the model in its other homes hasn’t been determined, she said.
Extendicare Assist said it has “provided a number of administrative and consulting services to Southbridge Care Homes for many years, including at Orchard Villa, and we continue to do so.”
Southbridge recently won ministry approval for 300 additional beds to be added to existing homes in London, Owen Sound, Cornwall, Thunder Bay and Kemptville, near Ottawa, all of which will be redeveloped.
“It is our goal to ensure that seniors in Ontario have modern long-term-care spaces that support high standards of care,” said Chartier. That includes renovating old homes to add private and two-person rooms, she said.
Since the first wave of COVID, Chartier said Southbridge has hired an epidemiologist, sent nine staff for board-certified infection control training and hired another nine infection prevention and control experts.
As the Ontario Long-Term Care Commission into COVID-19 has heard from companies, unions, doctors and the military over the last few months, some have singled out the private sector.
On Oct. 15, Sharleen Stewart, president of the Service Employees International Union, told the three commissioners that the nursing home industry has long suffered from staffing shortages.
“Our union fought back against the system largely run by for-profit corporations that prioritized shareholder dividends over staff and resident well-being,” she said.
In her list of immediate “actions” needed to fix the system, she included: “No new builds awarded to for-profit nursing homes or operators.”
Commission members have asked pointed questions about ownership.
The future of corporate investment in the sector was the first question asked by commission chair, Associate Chief Justice Frank Marrocco, during a meeting with the Association of Municipalities of Ontario (AMO), which represents municipally operated homes.
“Do you see a role for the private sector … in the provision of long-term-care services?” Marrocco asked.
The responses were politely inconclusive although one AMO spokesperson noted that in 2016, municipalities provided an extra $350 million “over and above” the regular provincial funding for homes.
Commissioner Dr. Jack Kitts noted Ontario’s three nursing home models — not-for-profit, municipal and for-profit — and asked:
“Do we need three different types of homes? And is there an ideal model?”
The commission is to submit its final report by April 30, 2021.
“We want long-term care to be a place where seniors get the health, social and integrated care they need to live vibrant and purposeful lives,” said CanAge’s Tamblyn Watts. “We know emotion-focused models work best. And it’s hard to imagine private equity making the investments that are necessary to change the model, because that is not what private equity was set up to do.”
But Tamblyn Watts said it is possible that investment companies could recognize the business opportunity that comes from excellent care.
“There is a more enlightened argument where private equity could certainly decide that it is in the best interests of its investors to run the market in person-centred care and make homes a place where people want to go.”
Pandemic to stimulate more active stock investment strategies: Nissay Asset CEO – TheChronicleHerald.ca
By Hideyuki Sano and Tomo Uetake
TOKYO (Reuters) – Social transformations triggered by the coronavirus pandemic are making index-following, passive stock investments less attractive and could reverse a decline in active stock investments, the chief executive of Nissay Asset Management said.
Hiroshi Ozeki said a recovery to pre-pandemic levels will be difficult for some industries such as restaurants, airlines and train operators.
Energy-intensive sectors also would be pressured by the need to deal with climate change, he added.
“Even after the pandemic is over and even with some government help, they won’t return to where they were,” said the chief of the 13 trillion yen ($125 billion) asset management firm.
“Up until now, passive style has been a vogue – it’s been said to be the most efficient investment. But with that, you are automatically putting your money in those industries with no growth stories,” he said.
Assets held by exchange traded funds (ETFs), among the most convenient passive investments, have been increasing globally over the last decade.
In contrast, active funds, which try to aim for higher returns based on stock picking, have seen large outflows in recent years.
“In the coming few years, active investments are likely to outperform passive ones. The era of active investment may be back,” Ozeki said.
Companies which Nissay scores highly for Environment, Social and Governance (ESG) had done better this year, he said.
Enterprises poised to benefit from the shift to renewable energy would prosper after the United States and Japan join other countries in adopting ambitious targets to achieve carbon neutrality.
U.S. President-elect Joe Biden has committed to net zero emissions by 2050 and Japanese Prime Minister Yoshihide Suga in October set the same goal for Japan.
“Some companies that have committed to 100% renewable power targets, such as Sony and Ricoh, are saying that Japan is now becoming the bottleneck among the developed world in achieving that goal,” he said, citing limited availability and high costs of renewable energy.
“So it means a lot that Suga has made that target. For investors, too, it reduces risk when the government clarifies its long-term goal,” Ozeki said.
Ozeki also said for next year he expected:
* Global share prices to rally further as the pandemic lasts longer than expected, forcing policymakers to continue to support the economy through monetary and fiscal measures.
* Short-term U.S. interest rates to stay low, making currency-hedged dollar bond investments attractive for Japanese investors.
Follow Reuters Summits on Twitter @Reuters_Summits
(For more summit stories, see)
(Reporting by Hideyuki Sano in Tokyo and Tomo Uetake in Sydney; Editing by Stephen Coates)
Fall Economic Statement 2020 – Investment Executive
Vancouver investment firm bought under fraudulent circumstances: IIROC – Powell River Peak
Vancouver-headquartered investment firm PI Financial Corporation was purchased under fraudulent pretences, according to allegations set out in a notice of hearing from Canada’s investment regulator.
The Investment Industry Regulatory Organization (IIROC) alleges Gary Man Kin Ng and Donald Warren Metcalfe duped their lenders, who assisted them in buying PI Financial in 2018 for $100 million.
Ng personally guaranteed the loans used to buy the firm, however, “despite his representations, Ng did not actually own, control or have trading authority over the securities accounts pledged as collateral,” according to IIROC. “Instead, ownership and control of the collateral was falsified by Ng and Metcalfe.”
Before buying PI Financial, which is said to employ over 300 people across Canada, Ng, 36, was an Approved Person and a Registered Representative for selling securities. He owned a Winnipeg-based firm named Chippingham Financial Group Limited via various corporate structures referred to by IIROC as the Ng Group. In November 2018, Ng, through the Ng Group, acquired a 100% controlling interest in PI Financial, IIROC stated in a notice of hearing that has scheduled a preliminary appearance on January 6, 2021.
Ng is said to have borrowed $80 million from “Lender One” and $20 million from “Lender Two.”
As security for the loans, “Ng purportedly granted separate, unencumbered security interests to Lender One, and also to Lender Two, over collateral including certain Chippingham securities accounts (later PI Financial accounts) which were owned by him,” stated IIROC, adding such representations were fake.
Ng is accused of “vastly overstating” the value of assets in the accounts and altering securities account statements.
“Metcalfe also perpetrated a fraud as he directly and actively participated with Ng in the falsification and distribution of false and/or fictitious account documentation to lenders,” it said in the November 24 notice of hearing.
In addition to the $100 million to buy PI Financial, Ng and Metcalfe borrowed a further $40 million from Lender Two and then $32 million from a third lender – all based on falsified collateral.
Although PI Financial was 100% owned by Ng, company officials “became aware of the issues concerning Ng’s purported ownership of securities accounts at the end of January 2020, and immediately reported these matters to IIROC,” the notice states.
Both men failed to attend an interview with IIROC enforcement staff over the summer.
IIROC said, “Ng, who was born in 1984, represented himself to others as an extremely successful businessperson who created enormous personal wealth through highly successful technology, real estate and manufacturing investments in Canada and China.”
At the time of the PI Financial purchase, Ng spoke of the deal with BNN Bloomberg, whose hosts noted how unique the deal was, given most investment firms are bought by large corporate entities, not individuals.
Metcalfe, meanwhile, was someone who worked initially with Ng at Chippingham.
Some details of the alleged lies are outlined in the notice. For example, several accounts Ng purported to have a value of $91 million actually had a value of $1.9 million.
IIROC proceedings are civil and not criminal. Should the allegations be proven, Ng and Metcalfe face any of the following corrective measures: a reprimand; disgorgement of any losses; a maximum $5 million fine; suspension or prohibition of activities; and a permanent ban from the industry.
COVID-19 in B.C.: Over 2000 new cases and 46 deaths on weekend, five healthcare outbreaks, and more – The Georgia Straight
Farrell calls for consideration of city bylaw to stop street harassment in Calgary – Calgary Herald
Pandemic to stimulate more active stock investment strategies: Nissay Asset CEO – TheChronicleHerald.ca
Silver investment demand jumped 12% in 2019
Iran anticipates renewed protests amid social media shutdown
Galaxy M31 July 2020 security update brings Glance, a content-driven lockscreen wallpaper service
Tech19 hours ago
Review: PS5 is big and pricey, but boasts impressive speed and visual upgrades – CityNews Toronto
Media24 hours ago
Anti-mask fringe movement getting more media coverage than warranted: expert – Nipawin Journal
Art19 hours ago
Members of Beach Guild of Fine Art face COVID-19 challenges by hosting Online Holiday Show – Beach Metro News
Sports8 hours ago
Current and former Lions players rejoice over Matt Patricia's firing on social media – Yahoo
Health18 hours ago
19 test positive for COVID-19 at Toronto's Thorncliffe Park Public School – Toronto Sun
Art10 hours ago
Hariri Pontarini To Design Art Gallery of York University – Urban Toronto
Health12 hours ago
Ontario parents can now apply for second COVID-19 payout. Here's how – CTV Toronto
Tech11 hours ago
Cyber Monday gaming deals 2020: time's running out on these massive savings – Gamesradar