The Securities Commission granted exemptive relief to investment funds managed by IG Investment Management, Ltd. (IGIM) from certain provisions of National Instrument 81-102 Investment Funds (NI 81-102). This relief allows the funds to invest in securities of related underlying investment funds managed by Northleaf Capital Partners (Canada) Ltd. (Northleaf), which are not reporting issuers and are not subject to NI 81-102.
Key facts include IGIM’s role as manager, trustee, and portfolio advisor of the funds, and Northleaf’s strategic partnership with IGIM affiliates. The underlying Northleaf funds, which include Northleaf Private Equity Investors VIII and Northleaf Secondary Partners III, are non-redeemable investment funds focusing on private equity investments.
The reasoning for the relief is based on the belief that private equity investments offer unique diversification and potential for improved risk-adjusted returns for the funds. IGIM argued that investing in Northleaf’s funds provides efficient and cost-effective access to private equity markets, which the funds could not directly access due to lack of internal expertise and relationships.
The outcome is that the funds can invest in Northleaf’s funds, subject to conditions ensuring they do not actively participate in operations, are treated as arm’s-length investors, and do not pay duplicative fees. Investments must be disclosed to investors, and the manager must comply with conflict of interest provisions in NI 81-107.
The decision is grounded in sections 2.5(2)(a) and (c) of NI 81-102, which generally restrict mutual funds from investing in non-reporting issuer funds not subject to NI 81-102, and section 19.1(2) which allows for exemptions. The relief is also subject to the oversight of an independent review committee as per NI 81-107.