Jean Vincent, NACCA board chair, and Michael Denham, president and CEO of the Business Development Bank of Canada, sign the Term Sheet for the IGF at the NACCA’s Indigenous Prosperity Forum, in Feb., 2020.Fred Cattroll/Supplied
Michael Denham confesses he is not, by nature, much of a hugger.
So it came as a shock to the Business Development Bank of Canada chief executive to be suddenly engulfed in a bear hug while standing in line for a buffet lunch just after taking the top job six years ago, explaining where he worked to the stranger next to him.
“This entrepreneur told me BDC had saved his business, saved everything his family had worked for, on two occasions,” Mr. Denham said in an interview ahead of his planned departure from BDC in July. “That hug drove home the role BDC plays in its clients’ lives, the responsibility we have to entrepreneurs.”
This summer, Isabelle Hudon, currently Canada’s ambassador to France, will take over as BDC’s first female CEO. She is a former insurance executive, with responsibilities that included running Sun Life Financial’s operations in Quebec.
Mr. Denham plans to take a few weeks off this summer and start a new job in September – he declined to reveal his next employer.
During Mr. Denham’s time at the helm, the 77-year-old BDC dramatically increased its support for Canadian small to medium-sized businesses. The Crown corporation’s committed capital increased by 42 per cent in the past five years to $36.5-billion – it’s money that backs 62,000 entrepreneurs.
BDC posted a $371.5-million profit in the first nine months of fiscal 2021, the most recent financial results for the government-owned entity with a March 31 fiscal year-end. Taxpayers earned an average 9.8-per-cent annual return on equity at BDC over the past decade.
Mr. Denham and his team at BDC, along with executives at every financial institution, spent the majority of their time in recent months ensuring creditworthy clients who needed money to weather COVID-19 could get support. “When the pandemic hit last March, we made simplifying our internal procedures a priority,” he said.
BDC has 2,400 staff. “Hundreds of employees shifted responsibilities; for example, business advisers moved to roles in financing clients,” Mr. Denham said, adding the pandemic has been “been exhausting for all our employees, but deeply rewarding.”
Pandemic-linked financing programs remain a priority for BDC. However, as Mr. Denham prepares to hand over the reins, he highlights recent BDC initiatives meant to help Canadians rebuild as the economy reopens.
In May, BDC joined forces with many of the country’s banks to launch a $290-million Black Entrepreneurship Loan Fund, a credit facility meant to help business owners who face systemic barriers to accessing capital. BDC is contributing $130-million, along with a $128-million joint commitment from the country’s six largest banks, Vancity and Alterna Savings.
In April, BDC announced a $150-million first close on the Indigenous Growth Fund, the largest capital pool raised to date for Indigenous entrepreneurs. Along with BDC, the new fund was supported by the federal government, Export Development Canada and Farm Credit Canada, and it is meant for business owners in remote and urban communities.
Looking ahead, Mr. Denham said BDC also plans to expand funding programs for clean-technology companies, and expand a $160-million financing program to back intellectual property development at Canadian companies.
BDC announced the IP financing initiative last July. The program provides convertible debt to knowledge-based companies with revenue of more than $1-million and assets, such as patents, that lenders including banks have traditionally struggled to finance.
Looking back over the past six years, Mr. Denham said one of BDC’s most significant achievements was backing private venture capital funds that, in turn, support Canadian entrepreneurs. BDC invests in VC funds alongside institutions such as pension plans and wealthy individuals.
When Mr. Denham was named CEO, BDC backed 15 domestic VC funds with more than $100-million of assets under management, a size that ensures the fund manager should be viable in the long term. As he departs, BDC has investments in 42 domestic VC funds with at least $100-million of capital. Mr. Denham said: “The whole venture capital ecosystem in Canada is now humming.”
Editor’s note: (June 14, 2021) The number of BDC-backed VC funds with more than $100-million of assets under management has been corrected in the online version of this story. The number of domestic VC funds with at least $10-million of capital has also been corrected.
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