Once the exclusive domain of institutional and high net worth investors, recent legislation in Ontario has opened the door to private capital
markets investing to everyone. By accessing the vast potential of private investment markets, retail investors can now diversify their investment portfolios beyond stocks, bonds, and mutual funds.
Although typically illiquid (your money can be tied up for as long as five years or more), these investments can, and often do, provide superior returns. For example, The Yale Endowment Fund uses alternative investment products
to improve its returns. The $24 billion Endowment Fund invested most of its money in real assets, and in alternative investments like private equity and hedge funds. Since its inception more than twenty years ago, the Fund has enjoyed an average rate of return of 13.9% a year. Only you and your
Financial Advisor can decide if the lack of liquidity is worth the potential reward.
Q: What exactly does DIAM Capital Markets do?
DIAM Capital Markets Inc. or DCMI, is an Exempt Market Dealer (EMD) that focuses on raising capital and providing alternative investments in private companies that are not listed on a secondary market like The Toronto Stock
Exchange (TSX). Although the company is not prepared to rule out a specific market vertical, DCMI is currently focused on the real estate, advanced technology, renewable energy, and healthcare/pharmaceutical industries.
Q: How is DCMI different from what’s out there?
Unlike some of its competitors, DCMI has the strategic partnerships and the in-house knowledge needed to design and distribute a wide array of private investment products that include everything from real estate developments to
infrastructure projects. Although the company raises funds for a select group
of external clients, the majority of its efforts focus on raising capital for the real estate development activities of its sister company, DIAM Developments. For example, the company recently completed the financing for, “On The Danforth,” a mid-rise condominium development in the Toronto Beaches.
DIAM Capital Markets Inc. is owned by Moninder Khudal. Mr. Khudal has been involved in residential and commercial real estate and global capital markets since 2006 and has put together an extensive network of real
estate related companies. These include a real estate brokerage firm, a mortgage brokerage firm, a construction and development company and a high-end residential development firm.
Q What is your ideal client profile?
Since its inception, DCMI has focused on retail investors especially those that are familiar with, understand, and appreciate the real estate investment model.
Q: What alternative investment products are now available to retail investors in Ontario?
There are many new investment vehicles for Ontario investors. Each offers different levels of liquidity. For example, a retail investor can now invest in private companies involved in everything from real estate to rare art
and fine wines to mortgages and oil and gas,. to name a few.
One way to invest in these private companies is through a private equity fund. Typically these funds raise money through institutional and private investors and then invest the capital in promising private companies. Capital is
returned when there is an exit event like an initial public offering (IPO) or an acquisition.
A hedge fund is another popular alternative investment vehicle. This pooled fund invests in a variety of asset types like long/short equity strategies, distressed assets, or certain macro trends.
Other alternative investment strategies include direct investing in private companies or private placement debt. Similar to private equity investing, private placement bonds are not publically traded or rated by a credit rating
agency. They often come in the form of promissory notes or mezzanine debt and provide a steady cash flow.
Venture capital funds, investment in real assets like farmland, rare coins, precious metals, real estate and funds of funds are other forms of alternative investments that retail investors can now access.
Q: What about transparency, compliance and
Like all other investment dealers, the company is subject to some very stringent guidelines and is supervised by provincial regulators like The Ontario Securities Commission (OSC). In Ontario, the OSC registers dealers
and prescribes compliance and regulatory standards for Exempt Market Dealers like DCMI. Financial Advisors and their investors can be confident that DCMI is regulated and managed by securities professionals that adhere to the highest professional standards.
Q: Can my Financial Advisor sell me alternative
Most IIROC (Investment Industry Regulatory Organization of Canada) dealers and some MFDA (The Mutual Fund Dealers Association) dealers have an Exempt Market Dealer’s license. If your Financial Advisor works for one of these firms, there is no reason why he or she can’t sell you an alternative investment product. DCMI is also open for business, and the company’s Dealing Representatives would be happy to meet with you.
Q: How much capital do I need to get started?
Retail investors with any amount of capital can now invest in alternative investment products. Previously, a person had to qualify as an Accredited Investor (earning at least $200K per year for the past two years or having a
net worth of at least $1 million) to access these types of investment products.
Q: You’ve achieved career success as both an employee
and most recently, as a business owner. Why DIAM
Capital Markets and why now?
I believe that the right combination of opportunity, ability and attitude can deliver wins across the board. I am proud of what I have been able to accomplish up to this point in my professional career.
I recognized that there was a void that Strategic Product Partners could fill within smaller product manufacturers, and I took it. When the opportunity came along to rescue CMG-Worldsource Financial Services Inc., a troubled
financial company with declining sales and profits, I went for it. When I saw an opportunity to build Capital Partners International, a niche corporate finance firm, I took that too. My efforts were successful because I recognized the opportunity and had the ability, courage and attitude that helped me succeed.
I was happy as an employee; I was also happy as a business owner because I had the opportunity to test my entrepreneurial metal. I was content with what I had accomplished thus far and planned on doing more of the same until I was ready to retire. It took a very special opportunity to coax me back into the corporate world. I joined DIAM Capital Markets Inc. as their CEO because
I saw an opportunity to be part of something that might actually change peoples’ lives. The legislative changes discussed elsewhere didn’t just open a window, in my opinion, they threw open a door. Because it meant, at least
in Ontario where I live and work, a retail investor could, metaphorically speaking, move from the kids’ table to the grownups’ table.
In other words, it was no longer necessary to be an institutional investor or to have a high net worth to access potentially more lucrative alternative investment products. For the first time, a retail investor could diversify his or her investment portfolio beyond stocks, bonds, mutual funds, and other pre-packaged products. Quite frankly, I wanted to be part of that.
I have been involved in the financial services industry for the whole of my professional career. I have sat on all sides of the table - as a Financial Advisor with my own clients, as an executive in charge of operations (I had more than 892 Advisors reporting to me at one time) and as a business owner,-I understand and appreciate what it takes to be successful. I am always looking to expand my team with like-minded, experienced and committed financial professionals. If you are interested in helping me build
something special, please call me.
Suzen Fromstein, APR is an accredited communicator and the former Director of Communications at The Investment Funds Institute of Canada. She specializes in writing for the financial services and insurance industries and has completed freelance assignments for BOMIC, TD Bank, President's Choice, ABN Amro, Desjardins Financial Security and SunLife Financial, among others. Suzen is also the author of Suits and Ladders, Ten Proven Ways to Keep Your Job Safe - with a few jokes thrown in. Suits and Ladders was an Amazon Best Selling Book in the Career Guides Category.
Suits and Ladders Fromstein, Suzen; Paperback Sold by Amazon.com.ca, Inc.
DIAM CAPITAL MARKETS
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