Jim Kinnear: A taste for the new, with a finger on reset

On his way to lunch at a favourite Bay Street eatery, Calgary financier Jim Kinnear ran into an old nemesis, the man who, with a flick of a pen, had cost him and his investors many millions of dollars in lost value.

But Mr. Kinnear insists he harbours no hard feelings toward Finance Minister Jim Flaherty, who 4½ years ago snuffed out the income-trust financing model that made Mr. Kinnear's Pengrowth Energy Trust a darling for yield-hungry investors.

Back then, Mr. Kinnear helped lead the oil-patch resistance to Mr. Flaherty's Halloween Massacre, but "we're beyond that now," he insisted over the din of lunchtime chatter at Jump restaurant, a bright and busy bistro on the ground floor of a Toronto bank tower.

That day's chance encounter with Mr. Flaherty came just a month after the income trusts' tax advantages were finally phased out - but Mr. Kinnear did not come to lunch to lament the end of his meal ticket.

He wanted to talk about his continuing passions - golf, philanthropy and Kinnear Financial Ltd., a 30-year-old company he dusted off as his new vehicle to fill the high-yield, energy financing vacuum left by the death of the trusts. He is promoting an instrument called an overriding royalty interest which mimics some of the income trust's advantages for investors in energy production.

He has done one $100-million deal in exchange for a 5-per-cent cut of production from Calgary's Compton Petroleum Corp. He has also invested in an offshore gas field in Vietnam which is, he believes, the seed of a global energy royalty fund to complement his Canadian activity.

He concedes the jury is still out on his royalty venture - right now, it is one of a number of energy financing alternatives. But it was the same thing when he helped develop energy trusts in the 1990s. "When we started the trust business, we were pioneers. Ten years later, everybody was doing it."

Under his guidance, Pengrowth averaged a 14-per-cent compound return on investment over 20 years. After Mr. Flaherty's lightning strike, Pengrowth, like many trusts, was converted to a taxable corporation. Having retired from the company in 2009, Mr. Kinnear has reduced his shareholdings to divert more cash and attention to Kinnear Financial.

While it might seem like a jarring transition, such moves are typical of Mr. Kinnear, 63, whose career is notable for his knack for financial innovation - he proudly calls himself a financial engineer - and for his ability to keep reinventing himself.

Born in Toronto, he grew up in Montreal and Burlington, Ont., and worked in the securities business in London and Montreal. In 1980, as Quebec writhed in political and economic upheaval, he struck out for Calgary with a rental truck full of his worldly possessions and $200 in his pocket.

He hung out his shingle as a financial consultant in the oil patch, but business dried up in the 1980s downturn. He formed Pengrowth just to keep busy, using it as a vehicle for pension fund investment in the energy sector. In the 1990s it emerged as an early energy trust, buying mature assets from major oil companies, improving their productivity and distributing cash flow to investors.

Pengrowth gained a big public profile, especially as one of the saviours of the Calgary Flames hockey team, serving for 10 years as naming sponsor of the Saddledome arena. The intensely sociable Mr. Kinnear put himself forward as a community builder and a widely networked business connector with ties across Canada. "I seem to meet a lot of people one way or another," he says.

He still gives one of the most lavish Stampede parties, in the backyard of his mansion in plush Mount Royal. He gave $10-million seed money for the new $100-million Kinnear Centre for Creativity and Innovation, which is part of the Banff Centre. He supports East Coast university scholarships and charity golf tournaments for a Calgary hospital.

In his new incarnation, Mr. Kinnear has added international offices in New York and London - and he expects to spend a lot of his time in London where he can easily bridge the global time zones among Africa, Asia and North America.

But he is convinced Canada is the place to be for private energy investors over the next few decades. "Eighty per cent of the world's oil is controlled by national companies. There aren't that many places in the world where you can invest in reserves.

"If you accept in the long run that oil and gas is a good focus for investing, we are in a very good position globally."

With much of his business involving globe-trotting, he can work in some golf. Mr. Kinnear plays a lot, although not as well as he would like, sporting a handicap of 10 or 11. "I need practice on my short game, chipping and putting," he says, sounding like any weekend hacker.

But weekend hackers don't get to play in the AT&T Pro-Am at Pebble Beach, Calif. - as Mr. Kinnear recently did - or in the Bob Hope Classic. And for all that he gives up in handicap, he more than compensates for in nice real estate.

He paid a little less than $10-million for a venerable three-storey house beside the 18th green at the historic St. Andrews course in Scotland. Mr. Kinnear, a member of the Royal and Ancient Golf Club of St. Andrews, happened to walk by the house (whose address is 9 The Links),saw the for-sale sign and bought the place on impulse.

As in Calgary, he loves to use the house to entertain - there is a third-floor balcony with a splendid view of the course. "You can just about reach out and touch the flag pole," he says. And it represents a bit of a family homecoming. One strand of the Kinnear clan can be traced back to St. Andrews in 1215 - a couple of centuries before the first golf game was played on the old links.

While Calgary is still home base, Mr. Kinnear has a number of addresses, including a townhouse and office in Toronto, which occasionally brings him to lunch at Jump. On this day, the Alberta beef burger was sold out, but a California red wine took the edge off the disappointment. We feasted instead on the penne and chicken.

He is constantly aware of the distractions that arise from economic and political tensions between Ontario and Alberta. "Look, I'm a Torontonian and Toronto is the city in Canada everybody loves to hate. It is what it is."

He doesn't spend much time thinking about Calgary versus Toronto or Montreal. He says his goal is to get Canada's name out on the world stage, and garner recognition for what it has achieved in prudent economic and financial management. Canada is poised for greatness, he says, and he feels he is in an ideal position to spread the word around the globe.

He lists all the places where he plans to advance Canada's cause - from Dubai to Kuwait City to Singapore and Hong Kong. "We've got now what everybody wants," he says, citing Canada's resource wealth and strong institutions.

It's a long way from Ontario's Lake Simcoe, where a young Jim Kinnear came each summer to spend time with his grandparents. And where, as a teenager, he went into business, running a Globe and Mail paper route for cottagers.

He first learned to play golf there at the nine-hole Eastbourne Golf Club. Recently, he bought a second place on Lake Simcoe, just a couple of doors away from his other property, the summer home that his grandparents built in 1923.

After the end of the trust boom, he could have easily retreated to Scotland, Lake Simcoe and his golf addiction. "I retired for about five minutes - I got bored," he says, adding that this was one of the reasons he decided to reactivate Kinnear Financial.

He is not inclined to talk about when he will call it quits. Kinnear Financial, he says, has "lots of legs. It could go for a while." And if the current royalty product doesn't make it big, the always adaptable Mr. Kinnear is prepared to come up with other things.

After all, finance is a lot like golf. "It's a funny game," he says, wistfully. "Some days you do quite well, and other days less well."

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BEGINNINGS

- Born in Toronto, Dec. 31, 1947; grew up in Montreal

- Spent two years in pre-med at University of Toronto before graduating with Bachelor of Science

- His grandfather, lawyer Stewart Fairty, said to be the first employee of the Toronto Transit Commission in the 1920s

HOME LIFE

- Married, no children

- Has homes in Calgary; Toronto; Florida; St. Andrews, Scotland; Eastbourne on Lake Simcoe

CAREER

- Entered investment business in London in late 1960s. After returning to Canada in 1970, joined Midland Doherty; also worked for D. W. Taylor & Co.

- Kinnear Financial has offices in New York, London, Toronto and Calgary

PASSIONS

- Crazy about golf and playing it around the world.

- His Calgary Stampede party last year featured a backyard performance by the Canadian Tenors. The function's size forces the annual closing of the street behind his house.

- Remains a big Calgary Flames fan even though Pengrowth's Saddledome naming rights have gone to Bank of Nova Scotia.

OTHER INTERESTS

- Sits on boards of the National Arts Centre Foundation, Ottawa, and the Banff Centre

- In 2007, was instrumental in helping save the Canadian Open golf tournament, leading to the Royal Bank of Canada's emergence as title sponsor