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David and Natasha Sharpe, of Bridging Finance Inc. are photographed in the company’s downtown Toronto offices on April 11 2019. Bridging Finance provided financing for the purchase of the MV Sivulliq, a shrimp trawler. A new fund dedicated to financing Indigenous economic development offers Canadians the rare opportunity to invest in on-reserve projects through a private asset manager.

Launched this month, the Indigenous Impact Fund is the first of its kind. Run by Bridging Finance Inc., a Toronto-based money manager that specializes in debt investments and manages $1.3-billion, the fund is the brainchild of an Indigenous chief executive and is projected to deliver 8-per-cent annual returns.

David Sharpe, the chief executive of Bridging Finance, is a status Indian and a member of the Mohawks of the Bay of Quinte. After growing up on and off his reserve, he has spent the past two decades in the investment industry. “I feel as comfortable in a sweat lodge as I do in a boardroom on Bay Street,” Mr. Sharpe said in an interview with The Globe and Mail.

Mr. Sharpe runs Bridging Finance with his wife, Natasha Sharpe, who is the company’s chief investment officer and was formerly the chief credit officer for Sun Life Financial. Ms. Sharpe also spent more than a decade assessing credit risk at Bank of Montreal, including for Indigenous projects.

Their fund is launching at a time when Indigenous development opportunities are becoming more common, with many communities debating investing in large Canadian infrastructure projects. In March, a First Nations-led group said it is putting together a bid to buy a 51-per-cent stake in Ottawa’s Trans Mountain oil pipeline. Last week, a group representing 20 elected First Nation councils said it is looking to buy a 22.5-per-cent stake in TransCanada Corp.’s Coastal GasLink pipeline project in British Columbia.

The projects that the Impact Fund will help develop are smaller in scale − yet are necessary for everyday life. Examples of developments Bridging Finance have participated in over the past five years include a grocery store and a pharmacy, and the new fund will pursue the same types of opportunities.

Despite reconciliation efforts, the development of economic essentials on reserves remains muted. “It’s very difficult to do on-reserve lending in a traditional format," Ms. Sharpe said. When financing the construction of a retail plaza, for instance, the land is often used as collateral. “With on-reserve lending, you can’t do that, which makes it extremely challenging for economic development." These rules are written into the Indian Act.

Technically speaking, the federal government can provide Indigenous communities with upfront capital for these projects, or offer other financing solutions. But that’s proven to be more of a theoretical exercise. “If you wait for the federal government," Ms. Sharpe said, “you’ll be waiting a very, very long time."

In the private sector, large Canadian banks do look to participate in these projects, but they have their own credit-quality rules that limit when they can be involved. Banks tend to shun early stage developments, particularly construction projects, because there is no cash flow being generated from the asset.

The Impact Fund, then, is designed to provide a bridge to the banks − hence the company name Bridging Finance. It will provide early stage funding, and then effectively sell the loan to a major bank.

In fact, the company is often asked by the banks to get deals up and running. “Most of our referrals of business come from a bank who say, ‘I like this deal, I want to do this deal, but I can’t do it for, say, two to three quarters,’ " Ms. Sharpe said. Bridging Finance is able to […]

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