The Securities Commission granted exemptive relief to investment funds managed by I.G. Investment Management, Ltd. (IGIM) to invest in a related non-reporting, non-redeemable investment fund, Northleaf IG European PE Holdings (Underlying Northleaf Fund), which is not subject to National Instrument 81-102 (NI 81-102). This decision allows mutual funds (Top Funds) to invest in the Underlying Northleaf Fund, which focuses on European private equity assets.
Key points from the decision include:
– The Top Funds are mutual funds governed by Canadian laws and distribute securities under a simplified prospectus.
– The Underlying Northleaf Fund is managed by Northleaf, a firm with significant private markets investment experience.
– The Underlying Northleaf Fund will not be a reporting issuer and will not be subject to NI 81-102.
– The Top Funds will be the sole investors in the Underlying Northleaf Fund and will invest under an exemption from the prospectus requirement.
– The Underlying Northleaf Fund’s securities will be considered illiquid assets, and investments by the Top Funds will be limited to 10% of their net asset value (NAV).
– The relief is conditional on the Top Funds not actively participating in the Underlying Northleaf Fund’s operations, avoiding duplicate fees, and disclosing the investment in regulatory filings.
The decision is based on the belief that the investment in private equity through the Underlying Northleaf Fund will provide diversification and potentially improve risk-adjusted returns for the Top Funds. The relief is subject to several conditions to ensure transparency and avoid conflicts of interest, given the relationship between IGIM, Mackenzie, Lifeco, and Northleaf. The decision is supported by the relevant securities legislation and policies, including NI 81-102, NI 81-107 (Independent Review Committee for Investment Funds), and the Multilateral Instrument 11-102 Passport System.