TORONTO, Aug. 31, 2021 (GLOBE NEWSWIRE) — Penfund, an independent provider of junior capital to North American middle market companies, announced today the completion of an investment of second lien debt in Arrowhead Engineered Products (“Arrowhead”), a portfolio company of Genstar Capital LLC (“Genstar”). Proceeds from Penfund’s investment were used to support the acquisition of Arrowhead by Genstar.
Headquartered in Blaine, Minnesota, Arrowhead is a specialty supplier and distributor of aftermarket replacement parts for a wide variety of equipment types across the OPE, powersports, agricultural, industrial and automotive industries. The company is a critical supply chain partner to a fragmented supplier and customer base in both North America and Europe and offers over 380,000 SKUs.
“Arrowhead has performed exceptionally well under Riverside and Investcorp’s ownership and we are thrilled to be able to continue to support the company,” stated Adam Breslin, a Partner at Penfund.
Joe Mattina, a Partner at Penfund, added, “Genstar is a sponsor we hold in very high regard and this transaction is an important milestone in a new partnership.”
About Arrowhead Engineered Products
Arrowhead Engineered Products is a leading supplier of non-discretionary, mission-critical, aftermarket replacement parts for a wide variety of motorized vehicles and equipment types. Based in Blaine, Minnesota, Arrowhead has established locations in the United States, Canada, Europe, Asia and South America.
Penfund is a leading provider of junior capital to middle market companies throughout North America. The firm is owned by its management team and is currently investing its most recently established fund, Penfund Capital Fund VI. Penfund manages funds sourced from pension funds, insurance companies, banks, family offices and high-net-worth individuals located in Canada, the United States, the Middle East and Europe. Penfund has invested more than C$3 billion in over 225 companies since its establishment. Assets under management are approximately C$1.5 billion.
The investment crisis that nobody talked about in the 2021 campaign – The Globe and Mail
Much of the debate in the 2021 campaign focused on the next couple of years – if not the next couple of months.
Throwing money at the housing market, taxing house flippers, half-price restaurant meals: all the parties had promises that were meant to appeal to enough voters for just long enough to squeak by in a tight race or two.
The long view has been conspicuously absent. A better campaign would have taken seriously the issue that the C.D. Howe Institute examined in a report issued on Thursday about the bad-and-getting-worse outlook for business investment in Canada.
Since 2015, the amount of capital for each worker has been at best stagnant, and the rate of gross investment weak, the study says. Even worse, business investment in Canada has lagged the United States and other countries. In the second quarter of 2021, businesses invested just 50 cents in Canada for each available worker for every such dollar invested in the United States.
Coping with the debts of the pandemic. Battling climate change and transitioning from fossil-fuel dependency. Bolstering the health care system as aging baby boomers enter their 70s and 80s and the labour force shrinks. All of that will require money, which will require growth, which will require higher productivity – which will require higher investment.
The typical rebuttal is to chalk up the problem to the woes of the energy sector. But the study notes that investment in the U.S. energy sector fared much better than in Canada, indicating that it’s not just the commodity price environment at work in this country. Co-author and institute chief executive officer William Robson said in an interview that another key issue is that the decline in oil patch investment has not been balanced by a rise in investment in other parts of the economy that could create high-productivity, high-earning jobs.
Mr. Robson notes other warning signs: companies focused on distributing capital through share buybacks, for instance, and pension funds snapping up assets outside of Canada.
A realistic debate would start with the acceptance that Canada needs to have a marginal corporate tax rate no higher than that of the United States, he says. But he acknowledges that such an approach is likely out of step with the populist temper of the times. “There’s not a lot of sympathy for business. There’s not a lot of sympathy for people that have made a lot of money, however they made it,” says Mr. Robson.
In a recent letter to the editor, Karim Fazal contends that taxes on higher earners can boost economic growth, and allow the rich to get richer, citing a 2014 study from the Organization for Economic Co-operation and Development on income inequality. Failing to reduce income inequality can reduce economic growth, he adds. So, is taxing the rich the way to faster economic growth?
That’s not quite what the OECD said. The 2014 paper did indeed conclude that income inequality cuts into economic growth in the long run. But the OECD said it is primarily the gap between the lowest earners and the rest of society that is responsible, not the gap between high earners and everyone else. So, reducing the wealth of the 1 per cent, as a goal, doesn’t boost growth. The paper did say that tax increases on the wealthy don’t harm economic growth, although it went on to note that closing loopholes rather than raising rates could be both more efficient and fairer.
Reducing the gap between lower earners and the rest of society is what will boost the potential of an economy, the OECD states. But that goes beyond mere income transfers, and includes ensuring access to high-quality education and health care. Those policies increase social mobility and “create greater equality of opportunities in the long run,” the OECD paper states.
So, the key question is not how high taxes are on the rich, but how great opportunities are for the poor.
Deflated expectations: Capital Economics has revised upward its outlook for inflation in Canada in the next few quarters, pointing to persistent supply disruptions in North America and the sharp jump in maritime freight costs globally. In a research note issued last week, the consultancy now says it expects that inflation will remain near 4 per cent until March, 2022, rather than declining to 3 per cent by then as it had earlier predicted. However, senior Canada economist Stephen Brown wrote that he still forecasts inflation easing to less than 2 per cent in the second half of 2022, as freight rates revert to more normal levels, energy-specific inflation tumbles and the rate of increase in new house prices declines.
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Investment Consultants With $10 Trillion Make Net-Zero Pledge – Bloomberg
A dozen investment consultants advising on $10 trillion of assets are pledging to cut net greenhouse-gas emissions to zero by 2050.
The group, including Cambridge Associates and Willis Towers Watson, started the Net Zero Investment Consultants Initiative, which identifies nine steps to reach that goal, according to a statement Monday.
International export offices worth the investment, according to Saskatchewan government – Global News
The Saskatchewan government is moving full steam ahead on its plan to open four new international export offices.
The offices will be opening in London, United Kingdom; Dubai, United Arab Emirates; Mexico City, Mexico; and Ho Chi Minh City, Vietnam.
The move will give Saskatchewan a stronger presence in those regions, by expanding the province’s international network, according to the government.
The province says the establishment of these spaces is being implemented in an effort to facilitate investment trade efforts to grow and diversify Saskatchewan’s exports, assisting in COVID-19 economic recovery.
“Now we’re going through the process of hiring managing directors for those offices and we hope to have two of them open in November and two more in the first quarter of the calendar year,” said Jeremy Harrison, Saskatchewan Minister of Trade and Export Development.
The number of international offices will be doubling as the province already has a permanent presence in Japan, India, Singapore and China.
The offices in Japan, India and Singapore were open for businesses earlier this year, whereas the one in Shanghai, China has been operational since 2010.
Staff at the offices work full-time for the provincial government to promote trade and economic interests.
Harrison says despite the pandemic, Saskatchewan companies are able to export approximately 65 per cent of what they produce.
Some popular export items include potash, oil, wheat, canola seeds, lentils, canola oil, peas, canola meal, soya beans, and barley.
Just like the cost to export these products, operating those international offices isn’t cheap.
“It’s about a million dollars per year, per office, our entire international engagement will be about $9 million this year with the eight offices and the administration associated with that, but I mean with the return on investment being over $30 billion of international trade last year…” Harrison explained.
“Of course the offices aren’t responsible for every dollar of that trade, but that being said, having that long-term, on-the-ground presence really has paid significant dividends to the province, we would view it as being a tremendous return on investment,” he added.
Harrison also says with Saskatchewan negotiating its own deals, rather than the Canadian government, the province has been able to secure lower tariffs.
Tension with China grows with blow to Canadian canola farmers
The trade and export development minister goes on to say the Saskatchewan government decided to take trade matters into its own hands, opposed to relying on the federal government because it believes it can secure better deals overall.
In 2019, the minister, with the help of former Conservative Canadian Prime Minister Stephen Harper and his company called Harper and Associates, lobbied senior officials with the government of India to lower tariffs on Saskatchewan peas and lentils.
Harper and Associates is being paid for its role in assisting with the establishment of the international offices. The contract is yearly, and is renewed annually.
Harrison said the meeting resulted in the province temporarily reducing the tariff from 30 per cent to 10 per cent from June to August in 2020 and onwards.
Jason Childs, associate professor of economics with the University of Regina explains why the provincial government may have felt enticed not to leave trade matters to federal government officials.
“I think the perception that Saskatchewan feels underrepresented abroad and our interests aren’t being served, I think that says a lot about what’s going on,” Childs said.
He adds international offices are not uncommon among provinces in Canada, and they are supported across party lines.
International trade essential to Alberta’s food trade: Minister of Agriculture
By Saskatchewan being at the helm of its own trading decisions, Childs says the province can head trade missions that are dedicated to vouching for the specific agricultural products the province has to offer the rest of the world.
“So, the products we produce here in Saskatchewan, are going to be radically different than say the products produced in Quebec or southern Ontario, which are much more manufacturing-driven,” Childs said.
He says if the Canadian government was making these deals, then time government officials spend on having to represent the other jurisdictions across the country would be split.
Childs continues to say there are some notable benefits to Saskatchewan having its own international trading partners to advocate its own interests to, rather than other Canadian provinces or somewhere else in North America.
“Sheer population, sheer market size, the Canadian market is only 38 million people, whereas some of the countries we’re talking about Vietnam, China, India and the U.K., there’s hundreds of millions, billions of people involved, right so it’s a much larger market,” Childs said.
Harrison says these exports will bring numerous job opportunities to residents.
—With files from Mickey Djuric
© 2021 Global News, a division of Corus Entertainment Inc.
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