The Globe and Mail - 16.10.2019

B2| REPORTONBUSINESS O THEGLOBEANDMAIL| WEDNESDAY,OCTOBER16,2019

Aimia Inc.’slargest investor is ex-
pressing tentative support for
board nominees put forward by
dissident shareholders amidst a
continuing civil war at the loyalty
company.
The nominees are “qualified
and well-suited” based on an ini-
tial review, Mittleman Brothers
LLC said in a statement Tuesday.
It will “seek to engage” with them
as soon as the rebellious share-
holders’ information circular is
mailed in order to hear their
ideas, share its own views and
determine how much support it
might grant them.
The investment manager says
it is not part of the group that req-
uisitioned a special shareholder
meeting set for January, but is
“prepared to take all necessary
action to prevent shareholders’
voting rights from being in-
fringed upon at the upcoming
meeting ... including any attempt
to prevent Mittleman Brothers
from voting.”
“Since July 10, 2019, we have
made several public statements
that Aimia’s board should not as-
sume continued support from
Mittleman Brothers. Our stance
in this regard is unchanged,” said
the New York-based firm, which
owns about 23.1 per cent of out-
standing shares.
Last month, a group of share-
holders announced they aim to
overthrow half of the eight-mem-
ber board, which presided over
the sale of Aimia’s flagship Aero-
plan rewards program to Air Can-
ada earlier this year as well as
months of turmoil around con-
trol of the company.
Mittleman had also filed a
counterclaim against the Mon-
treal-based company along with
six current and former members
of the board. The showdown in an
Ontario court rebuts Aimia’s July
lawsuit accusing the investor of
violating a contracted truce, part
of a drawn-out battle over control
of the board of directors.
Mittleman said it has asked the
Toronto Stock Exchange to
“closely monitor” the loyalty
company’s dealings and require
that “any acquisition, financing,
issuance of securities, or other de-
fensive tactic ... be approved by
shareholders.”
Mittleman’s counterclaim
names Aimia chairman Bill
McEwan, chief executive Jeremy
Rabe, former chairman Robert
Brown, board members Thomas
Gardner and Robert Kreidler and
former board member Emma
Griffin.
The shareholder group,
dubbed Aimia Shareholders for
Accountability, filed a formal req-
uisition with the company on
Sept. 12 demanding a special
meeting to replace the four long-
est-serving directors “in the inter-
est of long-suffering investors.”
Charlie Frischer, a Seattle-
based investor who speaks for the
group, is calling for himself and
three others to take the place of
Mr. McEwan, Mr. Rabe, Mr. Gardn-
er and Mr. Kreidler, all of whom
came on board within the past
three years.
Aimia has lost about 60 per
cent of its stock value since Dec. 1,
2016, when Mr. McEwan and Mr.
Gardner joined the board, Mr.
Frischer has said.
He has also pointed to its mon-
ey-losing loyalty businesses,
which saw a net loss of $74.9-mil-
lion last year.

THECANADIANPRESS

AIMIA(AIM)
CLOSE:$3.41,UP4¢

Aimia’slargest

investorsays

dissident

shareholders’

boardpicks

are‘qualified’

CHRISTOPHERREYNOLDS
NEWYORK

Laurentian Bank of Canadahas
hired Kelsey Gunderson to lead
its capital-markets business,
snapping up an experienced
banker who became a free agent
earlier this year after an execu-
tive shuffle at BMO Nesbitt Burns
Inc.
Mr. Gunderson will be Lauren-
tian’s executive vice-president of
capital markets, and president
and chief executive officer of
Laurentian Bank Securities. He

takes over responsibility for over-

seeing all capital-markets oper-

ations from François Laurin, who

remains Laurentian Bank’s chief

financial officer.

Mr. Gunderson was most re-

cently global head of trading

products for BMO Capital Mar-

kets, but left the bank when De-

land Kamanga was promoted to

that role in April amid a broader

shuffling of the senior ranks. Mr.

Gunderson spent 12 years at

BMO, and his career has also in-

cluded stints at the U.S. offices of

Swiss bank Credit Suisse, and at

CIBC World Markets Inc., the

capital-markets division of Cana-

dian Imperial Bank of Com-

merce.

He joins Laurentian Bank at a

time of transition, as the bank

works through an ambitious

plan to reshape its place in the

Canadian banking market. Lau-

rentian’s leaders are betting

heavily on a digital revamp that

includes cutting costs, eliminat-

ing all tellers from branches and

revamping core banking systems.

The rate of change has created

volatility in the bank’s earnings,

testing some investors’ patience.

While Laurentian’s retail-

banking operations have drawn

most of the attention, the bank

has been searching for stronger

and steadier results from its cap-

ital-markets business – which fo-

cuses on helping institutional cli-

ents raise capital through debt

and equity, and also operates a

discount brokerage. In keeping

with other large Canadian banks,

Laurentian Bank Securities has

struggled with uncertainty in

global markets arising partly

from concerns over trade and po-

litical turmoil.

Mr. Gunderson declined to

comment on his new role, but

one of his first tasks “will be to

review the mandate” of the cap-

ital markets division and its “in-

teractions with the other activ-

ities of the [Laurentian Bank Fi-

nancial Group],” said spokeswo-

man Hélène Soulard, in an

e-mail, adding: “He brings with

him a breadth of experience in

Capital Markets in large broker-

age firms on top of which his

skills, talent and values are

aligned with [Laurentian

Bank’s].”

LAURENTIAN (LB)

CLOSE: $45.59, UP 31¢

LaurentianhiresKelseyGundersonasheadofcapital-marketsunit

JAMESBRADSHAW
BANKINGREPORTER

cShares ofAphria Inc.jumped by as much

as 18 per cent as the cannabis company

reported a profit of $16.4-million in its lat-

est quarter – its second consecutive quar-

ter of profitable growth.

The Leamington, Ont.-based pot pro-

ducer’s stock closed at $7.17 on Tuesday

afternoon on the Toronto Stock Exchange,

up roughly 15.5 per cent, after reaching as

high as $7.33 earlier in the day.

Its interim chief executive Irwin Simon

said during the quarter ended Aug. 31, the

pot company was able to increase its mar-

ket share to 12 per cent, based on data

from the Ontario Cannabis Store.

“Aphria brands continue to gain mo-

mentum in the Canadian marketplace. ...

We were able to gain a significant amount

of share during the quarter from our com-

petitors, driven by brand awareness, na-

tionwide distribution and the quality of

our products,” he told analysts on a con-

ference call. The company said the profit

amounted to 7 cents a share, up from

$15.8-million or 5 cents a

share in the prior quarter

and net income of $21.2-mil-

lion or 9 cents a share for the

same period last year.

Aphria’s latest earnings

beat the 2-cent-a-share loss

expected by analysts, ac-

cording to the financial mar-

kets data firm Refinitiv.

Revenue for what was the

first quarter of the compa-

ny’s 2020 financial year to-

talled $126.1-million, down

slightly from $128.6-million in the prior

quarter but up more than 800 per cent

from $13.3-million a year ago before legal-

ization of recreational cannabis in Cana-

da.

In its outlook, Aphria reaffirmed its

guidance for net revenue of about $650-

million to $700-million in its 2020 finan-

cial year, with distribution revenue repre-

senting slightly more than half of the total

net revenue.

Its adjusted earnings before interest,

taxes, depreciation and amortization for

the year are expected to be approximately

$88-million to $95-million, it

added.

“We believe our financial

results truly set us apart

from our peers in the adult-

use cannabis industry,” Mr.

Simon told analysts.

Aphria’s surprise profit

and positive forward guid-

ance comes after two of its

peers recently cut or missed

their own earnings forecasts,

which they attributed to var-

ious factors such as a slower

than expected retail rollout and delays in

government approvals for new cannabis

derivative products, such as edibles.

THE CANADIAN PRESS

APHRIA (APHA)

CLOSE: $7.17, UP 96¢

Aphria’sinterimCEOIrwinSimonsaysthatduringthequarterendedAug.31,thepotcompanywasabletoboostitsmarketshareto12

percent,basedondatafromtheOntarioCannabisStore.THECANADIANPRESS

Aphriasharesincreaseon

reportof$16.4-millionprofit

Asearningsbeat2-cent-a-share

lossexpectedbyanalysts,CEO

saysOntariopotproducer

keepsgainingmomentum

ARMINALIGAYALEAMINGTON,ONT.

Webelieveour

financialresultstruly

setusapartfromour

peersinthe

adult-usecannabis

industry.

IRWIND.SIMON

INTERIMAPHRIACEO

Canadian institutions are growing more

committed to making investment deci-

sions by applying responsible investing

criteria as part of their decision-making

mix – but there are cracks showing in the

global commitment to the concept.

RBC Global Asset Management’s annual

survey on responsible investing trends

found that 80 per cent of Canadian re-

spondents use environmental, social and

governance (ESG) principles as part of

their investment approach in 2019, and

the number who “significantly” rely on

ESG factors jumped five percentage points

to 26 per cent over 2018.

While firms that have adopted ESG

principles strengthened their commit-

ment, the survey found, there was an in-

crease in negative sentiment toward ESG

among firms who don’t use it, particularly

in the United States.

The proportion of respondents who

said an ESG-integrated portfolio would

perform better than a non-ESG-integrated

portfolio dropped to 28.9 per cent from

30.9 per cent in the 2018 survey. (Canada

was the primary exception, where 33.6 per

cent of respondents said an ESG-integrat-

ed portfolio would perform better, up

from 24.6 per cent a year ago.)

The portion of respondents who think

an ESG portfolio will perform worse than a

non-ESG portfolio increased significantly,

to 17.8 per cent from 10.4 per cent in 2018.

The number of respondents in the United

States who doubt the efficacy of an ESG

portfolio rose to 22.1 per cent from 18.4 per

cent last year.

RBC and its partner, BlueBay Asset

Management LLP, surveyed nearly 800 in-

stitutional asset managers, their clients

and other industry participants for the

survey. Signet Research Inc., which ana-

lyzed the data for the two, estimates a

sampling error of plus or mi-

nus 3.5 percentage points

with a 95-per-cent confi-

dence level.

“I think what’s important

to note is that while the

growth has slowed down,

the numbers are still high –

we have 70 per cent globally

either significantly or some-

what integrating ESG, which

is still quite a large number,”

says Melanie Adams, RBC

Asset Management’s head of

corporategovernance and

responsible investment.

“We’re not having the signif-

icant growth year-over-year

that we’ve seen in other years. But inves-

tors who have adopted ESG integration are

committed to this.”

Another factor, Ms. Adams believes, is

the global chase for “alpha,” or outper-

formance, and the belief among many

that superior returns are growing harder

to find. Investors who say they don’t think

an ESG portfolio can outperform may be

skeptical that any one investment strategy

will definitely outperform another.

Ms. Adams also noted other regional

differences: When investors were asked

what they considered to be the most im-

portant ESG factor, U.S. respondents said

cybersecurity, while Europeans answered

climate change, and Canadians, surveyed

in the midst of the 2019 SNC-Lavalin con-

troversy, answered anti-corruption.

Other surveys that show increasing im-

portance of ESG, or similarly themed in-

vesting concepts, have

picked up on its global adop-

tion, with the pocket of re-

sistance in the United States.

Aon PLC’s 2019 Global Per-

spectives on Responsible In-

vesting survey found 44 per

cent of U.S. respondents in-

dicated that responsible in-

vesting plays “no role” in

their investment decision-

making, compared with 29

per cent in Canada, 27 per

cent in Continental Europe

and 11 per cent in Britain.

Cidel Asset Management,

a Toronto-based investment

manager with more than

$6.5-billion in assets, has embraced the

use of ESG, says Arthur Heinmaa, the

firm’s chief executive officer and chief in-

vestment officer.

“It’s a key piece of constructing our

evaluation of any company,” he said. “You

have to look at all the different elements

that play into it, and particularly with ESG,

you have to look at it both ways: how a

company relates to the environment, but

also how the environment may impact

the company over time.”

Domesticcompaniesarewarming

toresponsibleinvesting,RBCsurveyfinds

DAVIDMILSTEAD

INSTITUTIONALINVESTMENTREPORTER

Whilefirmsthat

haveadopted

ESGprinciples

strengthenedtheir

commitment,the

surveyfound,there

wasanincreasein

negativesentiment

towardESGamong

firmswhodon’t

useit,particularly

intheUnitedStates.