I.G. Investment Management, Ltd.

Headnote

National Policy 11-203 Process for Exemptive Relief in Multiple Jurisdictions -- relief granted to permit investment funds subject to NI 81-102 to invest in securities of related underlying investment funds that are not reporting issuers.

Applicable Legislative Provisions

National Instrument 81-102 Investment Funds, ss. 2.5(2)(a) and (c), 19.1(2).

March 22, 2022

IN THE MATTER OF THE SECURITIES LEGISLATION OF MANITOBA AND ONTARIO AND IN THE MATTER OF THE PROCESS FOR EXEMPTIVE RELIEF APPLICATIONS IN MULTIPLE JURISDICTIONS AND IN THE MATTER OF I.G. INVESTMENT MANAGEMENT, LTD. (IGIM)

DECISION

I. BACKGROUND

The securities regulatory authority or regulator in each of the Jurisdictions (the Decision Maker) has received an application (the Application) from IGIM on behalf of iProfile US Equity Private Pool and iProfile International Equity Private Pool (the Initial Top Funds) and any additional existing mutual funds or those mutual funds established in the future of which IGIM is the manager (the Additional Top Funds and together with the Initial Top Funds, the "

Top Funds and individually a Top Fund) for relief to the Top Funds from:

1. Paragraph 2.5(2)(a) of NI 81-102, to permit each Top Fund that is a mutual fund to invest in securities of the Underlying Northleaf Funds, which Underlying Northleaf Funds are, or will be, non-redeemable investment funds that are not subject to NI 81-102; and

2. Paragraph 2.5(2)(c) of NI 81-102, to permit each Top Fund that is a mutual fund to invest in securities of the Underlying Northleaf Funds, which Underlying Northleaf Funds are not, or will not be, reporting issuers in any jurisdiction.

(the Requested Relief)

Under the Process for Exemptive Relief Applications in Multiple Jurisdictions (for a dual application):

(a) the Manitoba Securities Commission is the principal regulator for this application;

(b) IGIM has provided notice that section 4.7(1) of Multilateral Instrument 11-102 Passport System (MI 11-102) is intended to be relied upon in British Columbia, Alberta, Saskatchewan, Québec, New Brunswick, Nova Scotia, Prince Edward Island, Newfoundland and Labrador, Northwest Territories, Yukon Territory and Nunavut (together with Ontario and Manitoba, the Jurisdictions); and

(c) the decision is the decision of the principal regulator and evidences the decision of the securities regulatory authority or regulator in Ontario.

II. INTERPRETATION

Terms defined in National Instrument 14-101 Definitions have the same meaning if used in this decision, unless otherwise defined.

III. REPRESENTATIONS

This decision is based on the following facts represented by IGIM:

IGIM

1. IGIM is a corporation continued under the laws of Ontario. It is, or will be, the trustee, portfolio advisor and manager of each Top Fund. IGIM's head office is in Winnipeg, Manitoba.

2. IGIM is registered as a Portfolio Manager and an Investment Fund Manager in Manitoba, Ontario and Quebec and as an Investment Fund Manager in Newfoundland and Labrador.

3. IGIM is not in default of securities legislation in any of the Jurisdictions.

The Top Funds

4. The Top Funds are, or will be, mutual funds subject to NI 81-102, organized and governed by the laws of a jurisdiction of Canada.

5. Each Top Fund distributes, or will distribute, its securities under a prospectus in accordance with National Instrument 81-101 Mutual Fund Prospectus Disclosure (NI 81-101) or a long form prospectus prepared pursuant to National Instrument 41-101 General Prospectus Requirements (NI 41-101) (each a Prospectus).

6. Securities of each Top Fund are, or will be, qualified for distribution in the Jurisdictions.

7. The Top Funds are, or will be, reporting issuers in the provinces and territories of Canada in which their securities are distributed.

8. Each Initial Top Fund is not in default of any of the requirements of securities legislation in any of the Jurisdictions.

9. The simplified prospectus of each Top Fund discloses, or will disclose, in its description of the Top Fund's investment strategies that the Top Fund may invest up to 10% of its assets directly or indirectly in a diversified portfolio of privately held companies. This limit is consistent with the classification of the Underlying Northleaf Funds as illiquid assets for purposes of NI 81-102.

10. Each Top Fund is, or will be, subject to National Instrument 81-107 Independent Review Committee for Investment Funds (NI 81-107) and IGIM has established an independent review committee (IRC) to review conflict of interest matters pertaining to the Top Funds as required by NI 81-107.

Northleaf and the Underlying Northleaf Funds

11. Northleaf Capital Partners (Canada) Ltd. (together with its affiliates, Northleaf) is a global private markets investment firm with more than US$19 billion in private equity, private credit and infrastructure commitments under management on behalf of more than 200 institutional and family office investors, as of the date hereof. Northleaf is led by an experienced group of professionals, who collectively have significant experience in structuring, investing and managing global private markets investments and in evaluating, negotiating, structuring and executing complex financial transactions.

12. On October 28, 2020, affiliates of IGIM, Mackenzie Financial Corporation (Mackenzie) and Great-West Lifeco Inc. (Lifeco) entered into a strategic partnership with Northleaf whereby Mackenzie and Lifeco jointly acquired a 49.9% non-controlling voting interest and 70% economic interest in Northleaf.

13. Northleaf Private Equity Investors VIII (NPE VIII) is a non-redeemable investment fund. NPE VIII consists of a series of investment vehicles created to meet the legal, tax, regulatory or other investment requirements of specific types of investors (both taxable and non-taxable) which together comprise the investment fund. "NPE VIII" refers collectively to such investment vehicles. It seeks to provide investors with access to private equity assets consisting of a combination of mid-market and growth-oriented primary investments, secondary investments and direct investments (each a Portfolio Investment and collectively the Portfolio Investments). A "primary investment" is an investment in non-redeemable securities of a private equity fund issued directly by the issuer fund, whereas a "secondary investment" generally involves purchasing securities in an existing private equity fund from an existing securityholder through a private purchase and sale transaction between the existing securityholder and the buyer. A "direct investment" is an investment made directly in the securities of a private company, generally alongside other investment partners. NPE VIII seeks to earn a long-term rate of return in excess of returns generally available through conventional investments in public equity markets. NPE VIII's strategy is global in scope and, in making primary and secondary investments for NPE VIII, Northleaf focuses on making investments in or alongside a core group of private equity managers with well-established franchises, strong, long-term track records and demonstrated access to privileged deal flow.

14. Northleaf Secondary Partners III (NSP III) is a non-redeemable investment fund. NSP III consists of a series of investment vehicles created to meet the legal, tax, regulatory or other investment requirements of specific types of investors (both taxable and non-taxable) which together comprise the investment fund. "NSP III" refers collectively to such investment vehicles. It seeks to provide investors with focused exposure to private equity secondary transactions. NSP III seeks to achieve superior returns for its investors through investments in privately negotiated secondary transactions, while offering the possibility of reduced risk through portfolio diversification. NSP III's strategy is global in scope, and Northleaf leverages its broader private equity program, global office presence, extensive industry network and deep investor relationships to source opportunities diversified by size of investment, private equity manager, investment partner, geography and industry sector. Secondary investments offer additional benefits to investors by providing early cash distributions and by capitalizing on market inefficiencies and motivated sellers with limited liquidity options. Northleaf's experienced secondaries team focuses on negotiated acquisitions of mature fund and portfolio company interests, taking an opportunistic approach in situations where Northleaf has a competitive advantage. NSP III benefits from the focused investment strategy, experienced team, disciplined investment process and rigorous valuation and reporting systems that Northleaf has developed since the inception of its private equity secondary investment strategy in 2003.

15. NPE VIII and NSP III fall within the definition of "investment fund" under the Securities Act (Manitoba) (the Act). Northleaf currently offers and in the future may offer other private market funds that, are or will be "investment funds" under the Act (together with NPE VIII and NSP III, the Underlying Northleaf Funds).

16. The Underlying Northleaf Funds are or will be, managed by Northleaf. Northleaf is registered as an Exempt Market Dealer in Alberta, British Columbia, Manitoba, Ontario, Quebec and Saskatchewan, as an Investment Fund Manager in Manitoba, Ontario and Quebec and as a Portfolio Manager in Manitoba and Ontario.

17. The Underlying Northleaf Funds are not, or will not be, subject to NI 81-102, and have not and will not prepare a simplified prospectus or annual information form in accordance with NI 81-101 or a long form prospectus in accordance with NI 41-101.

18. The Underlying Northleaf Funds are not, and will not be, reporting issuers in any of the Jurisdictions or listed on any recognized stock exchange.

19. The Underlying Northleaf Funds are, or will be, sold only to investors who qualify to invest in the Underlying Northleaf Funds pursuant to an exemption from the prospectus requirement under applicable Canadian securities laws.

20. Northleaf Capital Partners (Canada) Ltd. as well as NPE VIII and NSP III are not in default of the securities legislation of any of the Jurisdictions.

21. The Underlying Northleaf Funds are, or will be, primarily held by accredited investors who are not affiliated with IGIM or Northleaf.

22. There is no established, publicly available secondary market for interests in Underlying Northleaf Funds nor are there generally any redemption rights applicable to investors in Underlying Northleaf Funds. As such, investors in an Underlying Northleaf Fund cannot readily dispose of their interests in an Underlying Northleaf Fund and any interest that a Top Fund holds in an Underlying Northleaf Fund will be considered an "illiquid asset" under NI 81-102.

23. As the Underlying Northleaf Funds are, or will be, closed-end, non-redeemable investment funds, and there are no subscriptions after the fundraising period and no redemption rights, investors neither subscribe nor redeem based on the net asset value (NAV) of the Underlying Northleaf Funds.

24. Each Underlying Northleaf Fund invests, or will invest, in other private equity funds sponsored by, and direct investments in partnership with, fund managers with whom Northleaf has an investment relationship. Each Underlying Northleaf Fund is, or will be, valued quarterly by Northleaf. In preparing the quarterly valuations of the Underlying Northleaf Funds, Northleaf considers the quarterly valuations that it receives in respect of each Portfolio Investment from the applicable fund manager in respect of the applicable Underlying Northleaf Fund's proportionate share of the Portfolio Investment. For valuation purposes, the Underlying Northleaf Funds' Portfolio Investments are stated at fair value based on financial statements and other relevant information as supplied by the relevant fund manager at each quarter end. Northleaf reviews each quarterly valuation for reasonability as compared to the prior quarter utilizing various performance metrics. Such valuations remain subject to adjustment in the event that Northleaf concludes that the valuation provided by the relevant fund manager does not accurately reflect the fair value of the Portfolio Investment. In such situations, Northleaf may consider other sources of fair value, such as trading comparables, transaction multiples or prior financing rounds.

25. On an annual basis the financial statements of each Underlying Northleaf Fund, are, or will be, audited by Northleaf's external auditors for its private equity funds, Ernst & Young LLP (Canada) (E&Y), where E&Y independently confirms the fair value of each Portfolio Investment. E&Y also audits the controls and processes in place to ensure Portfolio Investments are accurately valued in accordance with Northleaf's valuation policy.

26. Northleaf's private equity valuation policy is consistent with the International Private Equity and Venture Capital Valuation Guidelines.

General

27. Absent the Requested Relief, a Top Fund would be prohibited by sections 2.5(2)(a) and 2.5(2)(c) of NI 81-102 from purchasing or holding securities of an Underlying Northleaf Fund because the Underlying Northleaf Funds (i) are not subject to NI 81-102: and (ii) are not reporting issuers in the Jurisdictions.

28. IGIM believes that a meaningful allocation to private equity investments provides the Top Funds' investors with unique diversification opportunities and represents an appropriate investment tool for the Top Funds that has not been widely available in the past. Private equity investments have historically performed well in down markets; IGIM believes that permitting the Top Funds to invest in private equity, a subset of alternative investments, offers the potential to improve the Top Funds' risk adjusted returns.

29. An investment in an Underlying Northleaf Fund by a Top Fund is an efficient and cost-effective alternative to administering a private equity investment strategy directly. IGIM believes it is in the best interests of the Top Funds to make use of the experience and expertise of Northleaf to achieve exposure to a diversified portfolio of private companies. This will provide a Top Fund with exposure to world class private equity funds and assets the Top Fund would not be able access directly. Without established relationships and internal private equity expertise, which Northleaf possesses but IGIM does not, it is extremely difficult to invest with leading global private equity managers, due to capped fund sizes and limited access to the funds. As an asset class, there has historically been a much larger dispersion of returns across global private equity managers than there is for public equity managers. Accessing the top performing funds in private equity has historically made a material difference to returns. For this reason there is significant competition to access the strongest performers and many are closed to new investors. Northleaf's longstanding relationships with and access to strong performing private equity funds provides a distinct advantage that would be very difficult for IGIM to generate directly.

30. Further, Northleaf provides an active and purposeful approach to private equity portfolio construction, risk management and diversification that IGIM does not have the expertise to replicate. Northleaf engages in extensive due diligence of each investment opportunity to ensure that the investment meets the expected risk/return profile for each Underlying Northleaf Fund participating in the investment. In summary, investing in the Underlying Northleaf Funds will provide the Top Funds with access to investments in hard to access private equity funds and assets that the Top Funds would not otherwise have exposure to through portfolios of private equity investments diversified across different strategies, industry sectors and geographies constructed by Northleaf's experienced private equity professionals.

31. We note that the private equity funds that the Underlying Northleaf Funds will invest in are not, and will not be, considered "investment funds" under securities laws and, from a regulatory perspective, would be directly accessible by the Top Funds without regulatory relief.

32. We believe that Northleaf's expertise is also extremely beneficial in the secondaries market. As described above, the secondaries market involves purchasing interests in private equity funds from current investors or general partners who are seeking liquidity. The secondaries market has grown considerably over the past decade, but can generally only be accessed by firms like Northleaf that have extensive relationships with private equity managers and other investors in private equity funds. These relationships provide Northleaf with significant "deal flow". These interests can take many forms, including interests in one or more private equity funds sold as a portfolio and "single asset" vehicles where, as the name indicates, a sole company or asset is purchased in the secondary market indirectly through a managed vehicle structure. Since IGIM does not possess the applicable expertise internally, these opportunities cannot be accessed by the Top Funds except through a specialized secondaries manager like Northleaf.

33. Investments in the Underlying Northleaf Funds are considered illiquid investments under NI 81-102 and therefore are not permitted to exceed 10% of the NAV of a Top Fund. The investments in the Underlying Northleaf Funds are included as part of the calculation for the purposes of the illiquid asset restriction in section 2.4 of NI 81-102 for a Top Fund. The Underlying Northleaf Funds are similarly illiquid to, for example, investments in privately held companies. NI 81-102 allows holdings in these illiquid private companies so long as the investment is within the thresholds of the rule. Furthermore, IGIM has its own liquidity policy and manages the Top Funds' liquidity prudently under the policy.

34. The decision to permit the Top Funds to invest in the Underlying Northleaf Funds represents IGIM's business judgment and is not influenced by factors other than the best interests of the Top Funds.

35. Aside from the sections covered by the Requested Relief, the Top Funds will comply with section 2.5 of NI 81-102 with respect to any investment in an Underlying Northleaf Fund.

IV. DECISION

Each of the Decision Makers is satisfied that the decision meets the test set out in the Legislation for the Decision Maker to make the decision.

The decision of the Decision Makers under the Legislation is that the Requested Relief is granted, provided that:

1. No Top Fund will actively participate in the business or operations of any Underlying Northleaf Fund.

2. Each Top Fund will be treated as an arm's-length investor in each Underlying Northleaf Fund in which it invests, on the same terms as all other third-party investors.

3. In respect of an investment by a Top Fund in an Underlying Northleaf Fund, no sales or redemption fees will be paid as part of the investment in the Underlying Northleaf Fund.

4. In respect of an investment by a Top Fund in an Underlying Northleaf Fund, no management fees or incentive fees will be payable by the Top Fund that, to a reasonable person, would duplicate a fee payable by an Underlying Northleaf Fund for the same service.

5. Where applicable, a Top Fund's investment in an Underlying Northleaf Fund, will be disclosed to investors in such Top Fund's quarterly portfolio holding reports, financial statements and fund facts.

6. The prospectus of each Top Fund will disclose in the next renewal or amendment the fact that the Top Fund is invested in the Underlying Northleaf Funds, which are managed by Northleaf and that Mackenzie, an affiliate of IGIM holds a significant ownership interest in Northleaf.

7. The manager of each of the Top Funds complies with section 5.1 of NI 81-107 and the manager and the IRC of the Top Funds will comply with section 5.4 of NI 81-107 for any possible standing instructions concerning an investment by a Top Fund in an Underlying Northleaf Fund.

"Christopher Besko"
Director
General Counsel
The Manitoba Securities Commission

Application File #: 2021/0713