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I.G. Investment Management, Ltd.

2022-04-04 | Decision | 81-102 | Investment funds and structured products | https://www.osc.ca/en/securities-law/orders-rulings-decisions/ig-investment-management-ltd-23

National Instrument 81-102 Investment Funds, ss. 2.2(1) and 19.1.


The Securities Commission has granted an exemption to certain mutual funds (Top Funds) managed by I.G. Investment Management, Ltd. from the control restriction in section 2.2(1) of National Instrument 81-102 Investment Funds (NI 81-102). This restriction typically limits mutual funds from investing more than 10% of their equity in non-reporting issuer pools that are related entities.

The exemption allows these Top Funds to invest in and hold a larger percentage of equity in related underlying pools, specifically Northleaf Funds, which are not considered investment funds under NI 81-102 and do not issue a simplified prospectus or annual information form. These Northleaf Funds are managed by Northleaf Capital Partners and are involved in private equity, private credit, and infrastructure investments.

The decision is based on several conditions to ensure fair treatment and avoid conflicts of interest, including that the Top Funds will not actively participate in the business of Northleaf Funds, will be treated as arm’s-length investors, and will not hold more than 20% of the equity or voting securities of any Northleaf Fund. Additionally, investments in Northleaf Funds are considered illiquid and cannot exceed 10% of the net asset value of the Top Fund.

The exemption is also contingent on no duplication of sales, redemption, management, or incentive fees, and requires disclosure of the investments in Northleaf Funds to investors in the Top Funds’ documentation. The manager of the Top Funds must comply with conflict of interest requirements as per NI 81-107.

This decision facilitates greater flexibility for the Top Funds to allocate to private market investments, which is believed to offer potential diversification benefits and improved risk-adjusted returns for investors.