Oh, Canada

At school, American friends made a hobby of slagging Canada.  Pretty standard.  "Canadians are too polite", "Canadians are boring".  Luckily, "The Man Everyone Loved to Hate" was President of the U.S. at the time and the conversations were short.  We've all heard the swipes, some in Canada would agree with them, very politely and boring-ly, though despite our unflappable humility, we do love to have our skirts fanned from time to time.  

Fareed Zakaria, editor of Newsweek International is apparently taking a serious run at a Governor General's Award this year, despite the fact he's American.  Last week he published a column in Newsweek applauding Canada's virtues.  Mr. Zakaria writes in his article "Worthwhile Canadian Initiative", Canadians should be proud of the "common sense" and the capitalization rates of our banking system, which is getting recognition the world over.  Not exactly riveting stuff, but Switzerland must be hating us.

Canada is the only country in the industrialized world that has not faced a bank failure or calls for bailouts and government intervention.  The reason for this is our conservative, staid, risk-averse attitudes, the fodder of a-many jabs.  Our banks have been regulated to have far higher capitalization rates than the rest of the world.  Typically, our banks are leveraged 18 to 1 ($18 of debt for every $1 in the savings account), whereas the Americans are generally 26 to 1 and the European banks are a staggering 61 to 1.  Ooh la la.  Needless to say, this functions as a lot of profit in boom times, and, when the boom turns to bust the bank goes bursting and a Frenchman has one less half-caf, triple, Grande, three pumps sugar-free-vanilla, soy, no foam, 180 degree cappucino. 

Apparently, TD is brimming with pride these days.  They have gone from the backbenches of North American corporate obscurity, having been the 15th largest bank in N.A., to a major player, becoming North Americas 5th largest bank.

Mr. Zakari goes on to sing the praises of our 'responsible' natures when it comes to our fiscal policy.  We have been very good beavers and have stored up a lot of nuts through fiscal surpluses over the past decade to deal with the current financial crisis with a stable and sober approach. The Harvard PhD also likes our immigration program, our accountable mortgage policies, and our healthy life-expectancies.  Stop it, I'm blushing.

After having read this, I looked again at the the first line of the article.  It reads, "The legendary editor of The New Republic, Michael Kinsley, once held a "Boring Headline Contest" and decided that the winner was "Worthwhile Canadian Initiative".  This, for me, encapsulated much of the torn pride I felt throughout the article.  Though disguised as complements, we Canadians, can never escape the love affair foreigners have with taking a few jabs at our responsible, risk averse, common sensical, conservative selves.  Characteristics of good bankers it seems.

Business owners like the long view

"One of the reasons business owners are preferring private equity," says Jacoline Loewen, author of Money Magnet, "Is they appreciate that the investors go in for five years. It sure feels better than the short term view of shareholders in the public market who bale as soon as they see anything slightly off."
Long term trends are difficult to remember for investors in public markets.
This is an interesting chart as you can see we are still 5% above the trend line. Yet the public market ignored job loss information that came out last week, and ended up higher by Friday probably due to wishful thinking.
Private equity is in stark contrast to this short term thinking demonstrated in the public markets. Five years with a company before taking back the money is the shared goal. Think how this long term approach by shareholders helps business owners during these times.
One of the top fund managers at my secret handshake club said that these are historic times and our children will read about them. Now that is long term thinking.

Mining likes investing in Africa

Africa ain't for the faint hearted. Despite the harsh environment, and clash of cultures, Canadian mining companies are making huge advances.
The time when Canada's presence on the African continent was primarily characterised by numerous missionaries and food donations is well and truly over! In countries such as Congo, Mali and Tanzania, when it is learned that you are from Canada, Denis Tougas says you are immediately asked if you work for the ‘mining’, a perception entirely consistent with reality.
Canada is now dominant - in fact, some say superpower - in the African mining sector, a position the country intends to maintain and develop using all means at its disposal.The salient presence of Canadian mining is relatively new in Africa and is rooted principally in the programmes of liberalisation of the sector from the early 1990s. These programmes have been driven by the World Bank, which from 1992
(1) had begun defining the extractive sector as the main engine of development for many countries.
(2) The privatisation of state enterprise – promoted as a means of encouraging the entry of foreign investment – has opened the door to foreign companies. At the head of this development, especially with regard to the smaller exploration companies known as ‘juniors’, are Canadian companies. These companies have an immense commercial presence in Canada: of the 1,223 mining companies listed on the Toronto Stock Exchange, the largest in the country, more than 1,000 are juniors!
(3)A HUGE EXPANSION
Currently, according to the Ministry of Natural Resources Canada (NRC), only the Republic of South Africa, with over 35% of assets and investments, is just ahead of Canada in the African mining industry. But with South Africa’s assets concentrated on its own territory, Canada dominates the rest of the continent.The data compiled by the NRC demonstrates the speed with which the value of Canadian mining assets in Africa has grown over the last twenty years: at US$ 233 million in 1989, this figure grew to $635 million in 1995, and $2.8 billion in 2001, growing further to $6.08 billion in 2005, and $14.7 billion in 2007.(4) This total value is estimated to reach $21 billion by 2010.
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Thank you to Michael Power for the referral to this article.

Does mean marketing grab market share?

German Engineering, Swiss Innovation, American Nothing.

Ouchy!

This is an advertisement used by Daimler and is it mean? It's good business. Competitive companies get on with growing their business. Brand America is tarnished and Mercedes is using the anti-American sentiment to grow their market share.

Does an experienced partner win private equity more?

The quality of your partner counts big time. In the case of entrepreneurs seeking capital from Venture Capitalists, nothing helps more than having a partner with past success.

Venture-backed firms tend to cluster in industries. Those that are most common for venture capitalists to fund are Internet and software, biotechnology, and telecommunications. SJ Gibson of Harvard Business School recently completed a study on these industries to measure who gets financing and who tends to be those who have had a successful start-up.

Here's an excerpt:
Q: Was there anything in your findings that surprised you?
A: The size of the effect of past success was surprising. We know that there was likely to be some degree of performance persistence, but the magnitude was quite striking.
Q: Given the current economic conditions, do you have any advice for entrepreneurs who are considering launching a new venture at this time?
A: Certainly one lesson that emerges from our analysis is to find an experienced (and successful) partner! Given the very difficult investment conditions, venture investors are paring back their portfolios and are hesitant to make new commitments. To get serious consideration, the more that you can do to seem like a "sure thing," the better off you are.
More generally, being as careful as you can be with resources, and flexible.

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