Wanted: Private investment for job creation; Since its founding in 1998, Investissement Quebec (IQ) has assisted SMEs by directing them to possible sources of financing government issues. (Government Issues).

The role of the government-owned corporation called Investissement Quebec (Investment Quebec) is to stimulate private investment and create jobs in Quebec. For this purpose, IQ offers various financing and tax tools that help companies of all sizes, in most sectors of economic activity and at any stage in their development. "We help companies in the start-up phase, doing export projects, R&D, etc.," explains Josee Mom, communications agent for Investissement Quebec. The range of tax tools available to the corporation includes, among others, the New Economy Centres and the Quebec Business Investment Corporation (QBIC).

Investissement Quebec is a gateway for local and foreign investors who wish to grow and prosper in Quebec. In 2000-2001, IQ supported Quebec and international companies in a total of 929 financing operations. Ultimately, these initiatives will lead to investments of $5.4 billion and the creation of some 24,228 jobs. The corporation, in partnership with its clients, seeks to develop integrated solutions that can be adapted to their clients' needs and specific expectations.

The goal of IQ is to generate $5 billion of private investment in the province over the next five years, and $1.3 billion m local investment. Moreover, IQ ensures that its actions generate a net gain to the Quebec economy by systematically evaluating the spin-offs of the projects it finances. "For every dollar IQ has helped raise, the government has collected $4.68 in taxes and related revenues that can be attributed to our activities," says Louis L. Roquet, president and CEO of Investissement Quebec.

The Roles of IQ

Investissement Quebec, previously known as Societe de development industrielle (SDI), now includes the "foreign" dimension acquired from the former Department of Industry and Commerce. IQ, however, now plays a new role. Morn explains that the government-owned corporation has two missions: it works with Quebec companies, offering them financing and tax solutions, and it also has the responsibility of finding investments from foreign companies wishing to do business in Quebec.

In both cases, its goal is the same: to generate investment and create jobs in Quebec, whether the initiatives come from companies inside or outside the province, or from subsidiaries of foreign companies already located here. "In that case, we encourage them to expand in North America rather than elsewhere," Morn adds.

Although IQ has tools specially designed for companies working in the new economy, it does not restrict itself to that sector. According to Nathalie Marchand, CMA, one of the IQ portfolio managers, only retailers and wholesalers are excluded. However, the government-owned corporation gives preference to certain special niches like innovation, R&D and exports.

Financing

Unlike such agencies as the Societe generale de financement (SGF), Investissement Quebec does not invest directly in companies. Instead, IQ offers financing assistance consisting of a whole range of products. All companies needing funds for a development project can consult IQ. They first meet with a financing advisor, who guides them toward the appropriate program. More often than not, the corporation will provide loan guarantees to entrepreneurs who need money. However, as Morin explains, it does not take the place of a financial institution or other type of partner.

The company must also put up funds of its own. IQ intervenes when the risk is high and the banks do not want to take it alone. "The recent budget of the Minister of Finance of Quebec, Pauline Marois, should enable us to make direct loans to SMEs," Marchand points out. Other measures included in the budget will assist companies in these more difficult economic times. IQ is the agency responsible for the application of these measures, and Morin adds that they must now be even more responsive to companies' needs. Flence, the solutions and tools Investissement Quebec offers have been adapted to the current economic situation.

Only some of the programs managed by Investissement Quebec have their own funding. These include the Private Investment and Job Creation Promotion Fund (FAIRE). With respect to tax credits, the corporation only issues certificates of eligibility for various tax measures. Accordingly, with only a few exceptions, IQ does not get involved in the actual financing of companies. "If we finance a company, we only do it on an interim basis, i.e. until it receives its tax credits," Marchand adds.

Morin encourages companies with projects or financial needs to consult IQ early on in the planning stage. "Entrepreneurs have a tendency to wait until the last minute, when it is more difficult for us to help them," she says. As soon as an interesting project arises, companies are invited to contact IQ. Its professional staff takes the time necessary to counsel the companies and find the best solutions for financing their operations. As Morn points out, "Whether it is a loan, a loan guarantee, or working capital, they shouldn't hesitate." In any case, the consultations and advice are free until the two parties reach an agreement. When the decision is made to assist an entrepreneur, minimal management fees are charged.

Investissement Quebec, which employs some 300 people, has only three CMAs working as portfolio managers. As one of the few CMAs working there, Marchand notes that she may not match the standard portfolio manager profile, but that her education has prepared her very well for her duties. "Most of the people with positions similar to mine have come from financial institutions or development agencies, and their experience is mainly in financing," she says.

As a new corporation, Investissement Quebec has already begun to establish roots in the Quebec business landscape, and the spin-offs generated by its activities are growing from year to year.

Julie Demers is the associate French editor of CMA Management.

Financing Granted by Program or Program Segment, 2000-2001


                                        Number of    Value (SM)
Program or                              Financing
Program Segment                         Operation   Financing

Innovation

Production and alliance                    97          42.2
 * Tax credit                              230         63.5
 * Development                             40          10.6

Exports

 * Line of credit                          79          49.2
 * Marketing                               35          32.6

Cooperative                                48          17.3
Non-Profit                                 93          24.3

SME                                        138         10.5

Other (2)                                  22          12.8

Sub-total                                  782        243.0

Financing of Major Projects, 2000-2001

FAIRE (3)                                  139        434.4

Government mandates                        8          125.2

Sub-total                                  147        559.6

TotaL                                      929        802.6

                                          Value (SM)
Program or
Program Segment                         Projects (1)

Innovation

Production and alliance                        169.8
 * Tax credit                                  319.2
 * Development                                  38.6

Exports

 * Line of credit                               77.5
 * Marketing                                    35.7

Cooperative                                     36.6
Non-Profit                                      60.0

SME                                             31.0

Other (2)                                       29.9

Sub-total                                      798.3

Financing of Major Projects, 2000-2001

FAIRE (3)                                    4,365.6

Government mandates                            228.0

Sub-total                                    4,593.6

TotaL                                        5,391.9

                                               Number of Jobs (1)
Program or
Program Segment                           Existing            New

Innovation

Production and alliance                 5,081                 1,159
 * Tax credit                           4,799                 2,606
 * Development                          542                   387

Exports

 * Line of credit                       3,549                 737
 * Marketing                            1,364                 509

Cooperative                             2,507                 343
Non-Profit                              1,147                 1,122

SME                                     583                   862

Other (2)                               916                   129

Sub-total                               20.488                7,854

Financing of Major Projects, 2000-2001

FAIRE (3)                               20,094                16,374

Government mandates                     309                   0

Sub-total                               20,403                16,374

TotaL                                   40,891                24,228

(1)Depending on the plan provided by the companies, project
implementation and job creation are spread over a maximum period of
three year.

(2)This category includes amounts committed under the Growth Working
Capital Fund, the Adjustment Working Capital Fund, the Experimentation
Measure, the Investor Immigrant program and Recyc-Quebec.

(3)Private Investment and Job Creation Promotion Fund