Diversifying Alberta’s economy: Driving investment through capital markets

Just last month, Athabasca University’s Faculty of Business hosted a symposium as part of an ongoing initiative aimed at celebrating and engaging the future of learning. The symposium – Diversifying Alberta’s economy: Driving investment through capital markets – featured a distinct mix of high-profile industry panelists. Each presented a snapshot of capital markets and the challenges faced in attracting, strengthening, and growing competitive business at home and internationally.

One of those panelists was Russell Kalmacoff, President and CEO of Rockmount Financial Corporation, and also a member of Athabasca University’s Business Leadership Advisory Council. The Faculty of Business spoke to Russell following the event to delve a little deeper into some of the key messages discussed and to explore some of his thoughts on how to improve access to capital, how to drive entrepreneurial spirit, and the intricacies and challenges of growing competitive business at home and internationally.

Athabasca University’s Faculty of Business (AUFB): Is there any research supporting the importance of better developing a stronger regional capital market?

Russell Kalmacoff (RK): Data should be collected to support the case for bolstering the provincial/regional capital market. These statistics will absolutely demonstrate the decline of all of the following: initial public offerings, primary market for new securities, capital pool companies, independent investment dealers, exits out of venture capital funds, and activity on the TSXV. These are all vital to growing the capital market in our own backyard.

AUFB: Should big banks be challenged to develop an ‘Alberta approach’ to support Alberta based investment dealers?

RK: ATB Financial should be a leader in challenging big banks – they are an Alberta based company with a vested interest in supporting capital markets at home. Alberta’s credit unions could be developed along the lines of the Desjardins Group in Quebec by using their community commercial banking strengths as a base for expanding into investment management, investment banking, and even insurance.

Bob Normand, past President of ATB Financial made the case for a broadly diversified financial industry when he said: “We need our specialized money management firms, fully integrated investment dealers, venture capital firms, and private equity boutiques. If there’s an opportunity for us to make Alberta’s economy more diversified and more stable, looking forward, the financial services area has got to be it”.

AUFB: How do we mobilize capital to create new jobs?

RK: We need more new companies in new industries, resulting in new careers, including sustainable, high quality jobs. This approach is more effective than simply funding jobs with taxpayers’ money.

AUFB: How do we elevate the importance of diversifying Alberta’s economy?

RK: This has become a national crisis. We need to encourage policy makers to put this issue high on the agenda, such as a public enquiry, or perhaps even a royal commission. Go back to the last Royal Commission of Banking and Finance (the Porter Commission) in 1963 when there were four pillars.

4-pillars-of-banking-finance

RK: Now we have six banks doing all of the above which are fraught with conflict and are self-regulated! At the investment banking level they are allowed self-regulation through Investment Industry Regulatory Organization of Canada (IIROC). A solution exists in the Competition Act R.S.C., 1985. Part VIII provides for Matters Reviewable by Tribunal including a definition of Restrictive Trade Practices that include Abuses of a Dominant Position.

AUFB: How do we as an educational institution better support entrepreneurs and SME’s?

RK: Glenn Hubbert, Dean at Columbia Business School said it well when defining the uniquely important role of Business Schools, “business schools are the heart of our great universities today, much as theology schools were in the past. They are where academic theory and the practical world engage one another”.

The FLAMES acronym encompasses the core prerequisite education required to operate in a capitalist economy

flames

RK: Offer a short, intensive course. It could be as short as six days of lecture and six days of guest speakers. Offer coaching support for entrepreneurs and SME’s in how best to link to access capital. A course based on the Innovation Financing Continuum flow chart, and application of coaching within incubators. These steps to success on the Innovation Financing Continuum should act as a roadmap, a pathway, a runway for the entrepreneur, instead it tends to be an obstacle course, a maze, and a jungle to wade through.

Another step (or first step) that should be considered is Research (Alberta Innovates). There is tremendous effort and money spent on basic, pure research, and it is accessible to the entrepreneur, you just have to look for it!

Closing thoughts from Russell: Our biggest challenge is to diversify the economy. This starts with education and financial literacy – financial literacy is key in both the broader public and also with our policy makers.

Athabasca University’s Faculty of Business is planning another symposium to be held soon, stay tuned to business.athabascau.ca for more information to come!

To view a recording of the symposium, click here: Diversifying Alberta’s economy: Driving investment through capital markets.

Thoughts on capital markets and diversification from Athabasca University’s Faculty of Business Professors:

Eric Wang, Associate Professor, Finance; Undergraduate Program Director – This is a topic that should be at the forefront of everyone’s mind.  Capital markets are vital to a well-functioning economy; negative and positive effects from capital markets can–and do–impact all levels of the economy. From financial education point of view, I sensed that there is a real need to educate on the operation of financial markets and financial institutions from a multiple views perspective (small investors, institutional investors, SME managers, governments, policy makers) to empower our students to become more ‘street smart’ in dealing with players in the financial world.

Merlyn Foo, Assistant Professor, Finance – The discussion on economic diversification cannot be separated from that on entrepreneurial support and start-up financing; developing an environment in which financing is available to risky start-up’s is crucial to economic diversification. There is a need for entrepreneurial education in our province, in terms of providing guidance to entrepreneurs along the entire life cycle of their businesses, from start-up funding to IPO and beyond. Lastly, we need to help grow the “entrepreneurial spirit” in Alberta!

Pamela Quon, Academic Coordinator, Management Accounting; Chair, Accounting & Taxation Academic Department – Diversifying Alberta’s economy is an important topic particularly during an economic downturn. In terms of growing capital markets, there is a greater need to focus on SMEs, to look at faster ways to finance and commercialize new technologies, and to encourage and support entrepreneurship, particularly in the younger generation.

Hussein Al-Zyoud, Assistant Professor, Economics – Future efforts to achieve a sustainable and diversified Economy begin with education. Was the economy impacted by the downturn in the oil and gas market, yes, but it does not mean that the economy lacks diversification, no. Every time there is a decline in oil and gas prices, we hear the calls for diversifying the economy. In fact, several initiatives have taken place since the early 90s in a steady progression of diversification away from oil and gas to other sectors such as; petrochemicals, alternative energy, information technology, and tourism. I believe that the energy sector was, and will remain, the engine of Alberta’s economic growth.

Thank you to all of our industry expert panelists, without your support and contribution, important events like this would not be possible!

Leo de Bever: Chairman, Oak Point Energy, Bennett Jones LLP, C.D. Howe Institute Former CEO AIMCO
Dave Mowat: President and CEO, ATB Financial
Ungad Chadda: President of Capital Formation, Equity Capital Markets, TMX Group
Darrin Hopkins: Director, Co-Head Public Venture Capital Division Richardson GMP
Michael G. (Mick) Thomson: President, Independent Capital Partners
Russell Kalmacoff: President and CEO of Rockmount Financial Corporation