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Family offices lead the way on impact investing – Financial Post

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NEW YORK — When former investment manager Ron Cordes started a charitable foundation in 2007, he got frustrated because he could only “do good” when he was actively giving the money away to needy causes.

Then Cordes discovered impact investing. “We became passionate about sustainability,” he told Reuters.

At first, the Cordes Foundation allocated 20% of its $10 million endowment to private equity investments aimed to make a beneficial social or environmental impact. Today, all of the foundation’s assets are invested in projects that promote the family’s values, including ethical fashion brands and sustainable supply chains.

“There are real investing opportunities with impact. It’s not about disguised philanthropy,” said Cordes, who made his fortune primarily after he sold his firm AssetMark in 2006.

For impact investors like Cordes, whose foundation is based in Maryland, financial gains are critical, but social returns are equally important.

More than a quarter of family foundations are now engaged in impact investing in some form, according to a 2019 Global Family Office report from UBS and Campden Research. The average wealth of the families UBS surveyed was $1.2 billion.

Climate change was the top cause supported by family offices, according to UBS, with health and clean water ranking high.

With so much capital involved, family offices – which can be managed privately or within a brokerage firm – rank with pension funds and institutional investors in the impact world. They might even be more important because they have the funds as well as the flexibility to make innovative investing decisions.

“If some family is into renewable energy, they don’t have to ask 15 people where they can invest,” said Shawn Lesser, co-founder and managing partner of Big Path Capital, an impact investing firm.

The push to make investment decisions with an impact is driven by a younger generation, but that does not mean it is exclusively a millennial pursuit.

Jennifer Kenning, co-founder and CEO of Align Impact, an investment management firm, said her oldest investor is 99 and she has other clients driving investments who are in their 80s. “We have investors across four generations,” Kenning said.

The key for baby boomers and the generation that precedes them is to make sure everyone is speaking the same language.

“If you show them they can make money, they start to see we’re talking about the same thing,” Kenning said.

For younger family members like Cordes (who technically is a baby boomer at 60), what is key is aligning investing with the values of the family. For Cordes, that has involved the Grassroots Business Fund and Women’s World Banking, non-profits that focus on developing economies.

“A lot of foundations have a grant side where they give to environmental causes, but on the asset side, they are invested in big oil. Families are saying that doesn’t make any sense,” said Michael Whelchel, the other co-founder and managing partner of Big Path Capital. “So they say, ‘Let’s have a double bang for our buck.’ ”

PROOF IN PERFORMANCE

Want proof that impact investing can pay off? Ask the folks who put money into Beyond Meat Inc through ImpactAssets, a fund that aggregates charitable investment accounts, known as donor advised funds. Beyond Meat’s initial public offering in May 2019 sizzled (https://reut.rs/2O7QkDC).

“We got a lot of attention from that, because we were an early investor, and it was such a high-flying and attention-getting IPO,” said Tim Freundlich, CEO of ImpactAssets. “But it’s just one piece of the evolving narrative here.”

ImpactAssets participates in 675 private debt and equity investments, making three new deals a week, Freundlich said. In contrast, most venture funds only do about 20 deals in a year.

The fund’s minimum investment is only $5,000, but most family offices are putting in $100,000 or more at a time.

With financial powerhouses like Goldman Sachs and BlackRock jumping big into sustainable investing (https://reut.rs/38QWC26), Align Impact’s Kenning thinks the next step is for more families to come together to push a broad agenda for societal good.

“Our climate issues are pretty substantial. What we do over the next decade matters,” Kenning said.

(Follow us //www.reuters.com/finance/personal-finance. Editing by Lauren Young and Dan Grebler)

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Hong Kong Investment Bank’s 2,325% Surge Baffles Local Investors – BNN

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(Bloomberg) — Another little-known Hong Kong-based financial services firm is mystifying investors with a dramatic price surge following its US listing. 

Magic Empire Global Ltd., which provides underwriting and advisory services and has helped just one company go public since 2020, surged 2,325% in its debut session Friday in New York to a market capitalization larger than football club Manchester United Plc. Magic Empire is the seventh firm this year from Hong Kong or China to experience similarly surprising moves. 

“This price level has clearly shown it is not sustainable,” said Ken Shih, head of wealth management in Greater China at Saxo Capital Markets HK Ltd., adding that without knowing who is doing the buying, it is hard to be definitive. “At this point, downside risk for investors clearly outweighs upside.”  

Last week, Hong Kong financial services provider AMTD Digital Inc. briefly became bigger than Goldman Sachs Group Inc. after a 14,000% gain in less than a month. The moves are particularly notable at a time of otherwise muted IPO activity and with Chinese companies Alibaba Group Holding Ltd. and JD.com Inc. threatened with delisting if they fail to comply with American auditing standards.

Magic Empire reported revenue of $2.2 million in 2021, a 17% drop from a year earlier. The company’s operating entity, Giraffe Capital Ltd., completed just one IPO in 2020 and none last year “due to COVID-19 and volatile outlook of the Hong Kong capital market,” according to the prospectus. Friday’s price surge brought Magic Empire’s market capitalization to $1.9 billion.

“The wild swings are likely due to the concentrated ownership, which certainly raises red flags,” said Kakei Lam, fund investment officer at Metaverse Securities Ltd. “I don’t see a resemblance to the meme-stock mania, given the thin trading volume.”

Magic Empire’s chairman Gilbert Chan Wai-ho and chief executive officer Johnson Chen Sze-hon co-lead Giraffe Capital, which obtained a license to provide corporate finance services in 2017. The firm mostly works on IPOs on GEM, the small-cap exchange, and often engages other small local brokerages as underwriters, including KOALA Securities Ltd., HKMonkey.com and Yellow River Securities Ltd. Chan and Chen own most of Magic Empire, with a combined stake of about 63%. The firm had just nine employees as of December 2021, according to its prospectus.

Hong Kong’s Scandal-Plagued Small-Cap Exchange Left for Dead

About half of the companies Giraffe Capital has taken public jumped on the first day, some by as much as 125%. Seven are now trading 30% to 92% lower than IPO price and another has been delisted.

Magic Empire didn’t respond to an email request for comment and calls to the phone number listed on its website weren’t answered.

In the first half of this year, fundraising in the Hong Kong IPO market dropped 92%. With the tiny companies that make up their customer base under close regulatory watch, small- and mid-sized financial advisory firms like Giraffe Capital have had a particularly tough time.

In 2017 and 2021, the Securities and Futures Commission and the Hong Kong stock exchange issued two rounds of warnings about so-called ramp-and-dump schemes tied to small-cap IPOs. These schemes manipulate very thin trading volume to inflate prices, luring unwary investors before shares collapse. 

The SFC declined to comment for this article, but has previously identified four typical features of problematic IPOs: 

  • Market capitalization barely meets the minimum threshold
  • Price-to-earnings (P/E) ratio is very high given the firm’s fundamentals and the valuations of its peers
  • Underwriting commissions or other listing expenses are unusually high
  • Shareholding is highly concentrated in a limited number of shareholders

Magic Empire’s relatively modest revenue means it qualifies as an “emerging growth company” under American legislation, according to its prospectus. These firms enjoy reduced reporting requirements compared to larger US-listed public companies, with only two years of audited financial statements required and disclosure obligations regarding executive compensation pared back. 

(Updates with Kakei Lam’s comments.)

©2022 Bloomberg L.P.

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Investment in Alberta's tech sector soars – CBC.ca

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Several Calgary-based tech companies are planning to hire more people and expand their office space as hundreds of millions of dollars flow into the sector.

Through the first half of the year, Alberta has attracted nearly $500 million in investment, according to briefed.in.

“We’re growing very, very quickly,” said Nic Beique, the founder of Calgary-based Helcim, which offers online payment services for small businesses across Canada and the United States.

The company recently received $16 million in venture capital funding from investors in Toronto and New York.

“We’ve doubled our business in the past six months alone, so our investors are already quite happy with that progress,” Beique said from the company’s headquarters in Eau Claire. 

Nic Beique is the founder and CEO of Helcim, a Calgary-based fintech company that offers payment solutions for businesses. The company recently received $16 million in venture capital funding. (Bryan Labby/CBC)

Beique says the company has grown by 400 per cent in the past year. It’s gone from 80 employees late last year to 145 today. He plans to hire 100 more people by the end of next year.

“My long-term goal is to build an anchor tenant in the Calgary tech scene. So when people think about Calgary, they think about Helcim … the way Shopify was able to do that with Ottawa, where they really kind of put them on the map for tech. I want to do that in Calgary as well.”

According to briefed.in, Alberta’s tech sector recorded $268.6 million in venture funding in the second quarter alone — in the same quarter a year ago, only $16 million was raised. 

Hirings, office expansion

Another rising star in the city’s tech scene is Virtual Gurus, which provides companies with virtual assistants to carry out a range of administrative duties for businesses in Canada and the States. 

Two years ago, the company had five employees. It now has 40 and plans to double that number by the end of the year, which will require more office space.

“We’re looking at expanding upstairs in order to facilitate that growth,” said Margaret Glover-Campbell, the company’s chief operating officer.

Margaret Glover-Campbell, chief operating officer of Virtual Gurus, is looking to more than double its number of employees in downtown Calgary by the end of the year. (Bryan Labby/CBC)

Virtual Gurus, which aims to hire more people from minority groups, including people with disabilities and members of the LGBTQ community, recently received $10 million in funding from several venture funds. The money will be used to help the company grow and launch a new app in the coming months.

New funding sources

Calgary-based startup ZayZoon, which previously relied on individual, private investors, recently raised $25.5 million in funding to help it expand. ZayZoon offers people early access to their earned wages and has partnered with approximately 3,000 businesses in the U.S. The company has 70 employees but plans to hire 15 more by the end of the year. 

One of its investors is Alberta government-owned ATB Financial, which is providing a $13-million debt pool for the company to use when clients seek an advance on their earnings.

Darcy Tuer, left, Tate Hackert, middle, and Jamie Ha are the founders of Calgary-based startup ZayZoon, which provides clients with early access to their earned wages. (Tate Hackert/ZayZoon)

Tate Hackert, one of the company’s founders, says ATB’s support is a boost for his company and the city.

“It’s just such a great story for Calgary,” he said.

“It just shows that there is more to invest in here than oil and gas, and we’re really looking forward to being part of that success story, right?”

Finding employees a challenge

An ongoing challenge for most tech firms is finding employees to support their expansion plans.

“We’re absolutely hiring as many people as we can. It’s a really tough market in Calgary because we do have so many tech companies here that are trying to hire people,” said Glover-Campbell.

Helcim says it takes a unique approach to hiring and provides greater opportunities for recent graduates of post-secondary schools. It aims to hire young professionals right out of school and provide on-the-job training and mentorship. 

Employees of Helcim in downtown Calgary. The company plans to add 100 more employees by the end of 2023. (Bryan Labby/CBC)

“Our focus is on giving these young professionals the ability to start their career at Helcim instead of fighting for senior talent,” said Beique.

He also says recent cooling off in the sector could help level out the demand for talent and help his company attract and retain staff.

Calgary has a lot going for it, Beique says, including an affordable cost of living and a good quality of life. He says 20 per cent of the companies’ recent hires are coming from outside the city.


Bryan Labby is an enterprise reporter with CBC Calgary. If you have a good story idea or tip, you can reach him at bryan.labby@cbc.ca or on Twitter at @CBCBryan.

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Investment industry faces widening skills gap around big data and ESG – The Globe and Mail

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This is the weekly Careers newsletter. If you’re reading this on the web or someone forwarded this e-mail newsletter to you, you can sign up for Globe Careers and all Globe newsletters here.

Radhika Panjwani is a former journalist from Toronto and a blogger.

The investment industry in Canada has a somewhat vexing problem.

It will need to retrain and reskill – with some sense of urgency – a sizable cohort of midcareer, and middle-aged workers, and nudge them into the age of technology.

“There has been a disruption in the industry, especially with respect to a demand and supply gap in skills,” says Viveck Panjabi, 32, a research associate at National Bank Financial. “The recent trends I have noticed across the investment management industry have been around Fintech, blockchain, machine learning and environmental, social, and governance (ESG). In the next five years, I believe fund managers and investment management firms will pivot more toward ESG-centric companies and look to integrate more of clean energy stocks as a percentage of their portfolios.”

When there’s sufficient data around ESG, these are integrated into the investment process.

Mr. Panjabi works in sell-side equity research covering 16 publicly listed companies on the Toronto Stock Exchange focused on the sustainability and cleantech sector, and he admits big data technologies will soon become an important driver.

Mr. Panjabi’s observances are in line with the findings of a CFA Institute report, which says the largest gaps between interest in learning and supply of expertise is in the area of emerging technologies in Canada. The sector needs tech-savvy professionals comfortable around artificial intelligence (AI), machine learning (ML) and decentralized finance. Also, Canada needs investment professionals who are adept at analyzing data related to future pathways for getting Canada to net zero by 2050, but their numbers are small.

No greenwashing, just facts

“ESG has introduced a level of complexity into investing that I haven’t seen before in my career,” noted a CFA Institute expert who was surveyed. “That complexity comes principally from two sources: the values introduced and the materiality differences by sub-sector. It is the latter source that introduces the opportunity for a skill-based investment approach.”

Sustainable investing is built on the idea that ESG/climate considerations are significant to both investors and society and that we need to develop sustainability accounting for both purposes.

But to incorporate ESG/climate into the investment industry, the sector will need to develop and refine the skills and abilities of its work force. It will not only need new talent, but may have to create new learning pathways for its current workers.

AllianceBernstein, a New York based global asset management firm, in partnership with Columbia University established a Climate Change and Investment Academy. The academy delivers climate-aware investing learning for its clients and partners so they are aware of the science of climate change and its impact on investment decisions.

T-shaped skills

More than a third of CFA Institute members surveyed acknowledged their roles would be significantly altered over the next five to 10 years. And the biggest disruptive factors will be new analytical methods, including AI and ML.

“The good news is that most investment roles are going to be changed in an interesting way because you will have data feeds that are much more reliable,” noted Rebecca Fender, head of strategy and governance for Research, Advocacy and Standards at CFA Institute and lead author of the report. “As a result, professionals will have more time to do in-depth analysis.”

Soft skills such as the ability to influence, persuade, manage time effectively and communicate remain critical. Hiring managers said finding candidates with T-shaped skills remains an ongoing challenge. ‘T-shaped skills’ refers to qualities that make an employee valuable. The vertical bar in the ‘T’ represents deep subject matter expertise, while the horizontal bar is the ability of that individual to connect to cross-disciplines and bring it all together.

Road ahead – training, reskilling

Fewer than half of survey respondents in the CFA Institute report said they receive support from employers to develop the new skills they need. And that may be the stumbling block to introducing reskilling initiatives. Reskilling appears to be the antidote for the skills gap.

In 2018, Guardian Life, a U.S. insurance company, partnered with General Assembly to create a data science curriculum and gave the actuaries on its payroll time away from work to learn.

Similarly, Verizon’s upskilling program offers free technical and soft skills training to its employees. The program was developed in partnership with Generation USA, a non-profit. The 10-to-15 week online programs are for roles including cybersecurity analyst, IT support specialist and junior cloud practitioner.

Investment bank JP Morgan has earmarked more than $350-million for its upskill plan, New Skills at Work. As part of this plan, the company will spend $200-million to train people for new, in-demand tech jobs; invest some $125-million to improve existing training courses through community colleges; and it will direct $25-million toward research initiatives to understand current and future labour market trends.

“One of the things that’s interesting when you compare our 2017 report to the current one is that there were a lot of skills that people were thinking of acquiring, but in the last few years we have seen more people take action,” said Ms. Fender. “The action to aspiration ratio has changed and that’s good.”

What I’m reading around the web

  • A recent Microsoft Work Trends Index 2022 report found the average Microsoft Teams user now sends 42 per cent more chats per person after hours. And weekly meeting time has increased 148 per cent since February, 2020. Some key findings are employees have now found a new “worth it” equation; managers are caught between leadership and employee expectations.
  • In this article Sam Dogen, 45, an investment professional, shares how he negotiated a severance package with his employer in 2012 and decided to retire, thanks to income from his rental properties, stock dividends and e-book sales. But one year into it, he realized a life of leisure wasn’t for him. Today, Mr. Dogen considers himself a “fake retiree” because he now takes on side-hustles to fill his time.
  • A study by the Oxford Internet Institute of 39,000 video gamers found “little to no evidence” that time spent playing affects their well-being. The results contradict a 2020 study by the same department, but with a smaller test group, which suggested those who played for longer were happier. “Common sense says if you have more free time to play video games, you’re probably a happier person,” said Professor Andrew Przybylski, in a BBC News article. He worked on both studies. ”But contrary to what we might think about games being good or bad for us, we found [in this latest study] pretty conclusive evidence that how much you play doesn’t really have any bearing whatsoever on changes in well-being.”

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