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Agriculture

The economic environment in the farm sector has supported growth over the past 15 years. Agriculture is always evolving and average farm sizes have increased. Technology has expanded the productivity and efficiency and farm equipment has become larger and more complex. Since 1999, total farm cash receipts have increased 90%, while crop receipts have increased 127%.

The average value of farmland in Canada increased 14.3% in 2014, 22.1% in 2013 and 19.5% in 2012.   Saskatchewan led the way with 18.3% increase in value over 2013. In, fact, Saskatchewan has experienced double digit growth in land value in six of the last eight years, resulting in land prices more than tripling in value since 2006.

Technology has changed the way agriculture operates. New technologies like GPS and GMOs have revolutionized the seeding process and the types of crops grown. Farmers will continue to adopt new technologies in order to meet the pressures of increasing productivity demands to feed growing world populations.

The agriculture sector has always been a major economic driver throughout Saskatchewan’s history. World demographics indicate continued demand for sustained growth and technological advancements. Agriculture represents a significant growth opportunity that can provide strong investment opportunities.

Provided below are examples of Agriculture investments within Westcap’s portfolio:

Agriculture

Healthcare

Canadians on average are officially over-the-hill. The median age of the population of Canada as of July 1, 2015 was estimated at 40.5 years-old based on Statistics Canada and with the generation known as the baby boomers entering its senior years, the proportion of seniors is only expected to grow. For the first time in history, the number of Canadians aged 65 and over has exceeded the number of children. For example, Canada’s total population has grown at an annualized 1.06% for the past five years. Canadian people aged 65 years and older have increased at an annualized rate of 3.81% while Canadian people under 65 years-old have increased at an annualized rate of 0.58% over the same time period. Within the next two decades, it is estimated that the number of people over the age of 65 in Canada, as well as in Saskatchewan, will rise growing to almost 25% of the population.

Canadians on average have been getting older for decades. As the baby boomers aged over the past 60 to 70 years, their demands have fueled the growth of many new industries and created a number of opportunities for investors and entrepreneurs in everything from electronics, retailers, music, movies and information technology. Now that the baby boomers are moving into their senior years the attention has switched to their demands for healthcare.

While much of the healthcare industry is government owned and operated, there are a number of profitable ways to privately invest in healthcare. First, there are opportunities to invest in healthcare infrastructure, medical manufacturers and suppliers, and some private medical services. Second, there are opportunities to invest in healthcare-related new ideas. These include new drugs and therapies, chemical and mechanical diagnostics, and mechanical improvements for services. The aging population represents a significant increase in the demand for healthcare and a need for increased capacity.

Provided below are examples of Healthcare investments within Westcap’s portfolio:

Healthcare

Hospitality

In Saskatchewan, and in particular Regina and Saskatoon, the hospitality industry continues to grow revenues despite the impact of lower oil prices. Economic diversification among natural resources, construction, technology and agriculture continue to drive growth in Saskatchewan with tourism and infrastructure investment following.

Confidence in the industry is evident with the hotel construction boom going on in Regina and Saskatoon with 2830 new rooms constructed in the past 5 years anticipating the rebound of commodity prices.

Westcap has approached investment in the hospitality sector seeking companies with strong balance sheets that are able to weather economic cycles or consolidation opportunities made available when cash flow becomes tight by prolonged economic downturn. Westcap is committed to making capital investments to ensure a superior product offering.

With recent renovations, both of Westcap’s investments – the Regina Ramada Plaza and the Ramada Saskatoon – are well positioned to utilize their abilities to be a one-stop hotel for guest needs. This clearly gives the hotels a distinct advantage over all the new limited service builds in the market. ”The latest renovations to the banquet areas certainly give us an edge” says Mr. Darryl Caudle, Vice President of Hotel Operations for Westcap.

Provided below are examples of Hospitality investments within Westcap’s portfolio:

Hospitality

InfrastructureAs Canadian national and regional economies grow, the expanding populations will heavily rely on modern and expanded infrastructure. For a number of years, both federal and provincial governments have made concerted efforts to reduce the infrastructure deficit in Canada. In Saskatchewan, infrastructure investments of $2.7 billion have been made by the provincial government, with another $2.2 billion to come over the next four years. As well, the recently elected Federal Liberal Government announced its intention for significant new infrastructure spending amounting to an average of $9.5 billion annually over the next 10 years. Infrastructure companies include those that are involved directly or indirectly in the development, maintenance, servicing or management of infrastructure. Among other sectors, infrastructure can include health care, transportation, utilities, and energy.

Infrastructure is required to serve an area’s residents and businesses with the necessary services and facilities. Investment into housing and commercial developments often goes hand in hand with infrastructure investments and is required in order for the sustainable growth of an economy. Investments into housing are critical in increasing the quality of the housing supply as well as supporting home ownership. Saskatchewan has experienced strong population growth in recent years which has resulted in sharp increase in demand for quality housing. This increase in demand has provided numerous investment opportunities.

Provided below are examples of Infrastructure investments within Westcap’s portfolio:

Infrastructure

Innovation

The Conference Board of Canada defines innovation as a process that creates and uses new ideas and knowledge to generate economic value. Innovation can be in radical, industry-destructive ideas that create new value chains and new businesses. Innovation can also be gradual and incremental through the improvement of existing product, services or business models. In either kind, there are great investment opportunities for the right investor.

The Prairie Provinces have a number of factors that make up a large but often overlooked potential for investments in the right innovation. Over 60% of the workforce in Alberta, Saskatchewan and Manitoba have graduated from a post-secondary institution1. The three Provinces each support new innovations and the minds that create them through research facilities, institutions and organizations such as start-up incubators and accelerators. These include the Saskatchewan Research Council, the Canadian Light Source, Innovation Place, Alberta Innovates Technology Futures, Innovate Calgary, Alberta Enterprise, the Banff Venture Forum, Innovate Manitoba, Manitoba Technology Accelerator, among others. The three Provinces also have active angel networks.

Innovation in Western Canada is focused in five main areas:

  • Biotechnology
  • Life Sciences
  • Chemical Engineering
  • Resource Extraction
  • Information Technology
1National Household Survey. Statistics Canada. (2011) CANSIM Table 109-0401.

Provided below are examples of Innovation investments within Westcap’s portfolio:

Innovation

MBOIn Canada, a growing number of small to medium-sized enterprise owners are experiencing important decisions regarding the succession of their business. In the next decade alone, approximately 75% of small and medium-sized business owners will be ready to sell their business. Some of the key issues that these enterprise owners are facing with respect to succession planning include1:

• Only 9% of businesses have a formal, written succession plan
• More than 80% of small to medium-size enterprise owners plan on exiting their business due to retirement
• Almost 50% of business owners plan to sell to buyers unrelated to their family, while another 18% plan to sell to members of their family. Both of which are likely to require a third party source of transition financing.

A management buyout (MBO) provides business owners with the opportunity to execute an effective business succession plan, while providing key employees with the opportunity to meaningfully participate in the continued success of the business. An MBO is often viewed by customers, suppliers, employees and other stakeholders as a positive progression of the business, as the process attracts knowledgeable capital and strategic partners that can facilitate the process and support growth initiatives. MBO’s are more likely to achieve a successful business succession with an 80% success rate, while inter-family succession has only posted a 32% success rate2.

1Canadian Federation of Independent Business
2Canadian Association of Family Enterprise

Provided below are examples of Management Buyout investments within Westcap’s portfolio:

Management Buyouts

OilGasThe World Energy Outlook conducted by the International Energy Agency, estimates the global energy demand to grow by approximately 37% by 2040. While energy sources are expected to be more diversified, oil and gas is expected to account for approximately 50% of energy consumption1. With proven oil reserves of approximately 173 billion barrels, Canada has the third largest amount of proven oil reserves, next to Venezuela and Saudi Arabia. With the majority located in the Western Canadian Sedimentary Basin, Canada, particularly Western Canada will play a major role in meeting the demand growth.

Long-Term

Moving forward, crude oil production in Western Canada is expected to grow annually by approximately 156,000 barrels per day from 2015 to 2020. By 2030, Canada is expected to produce approximately 5.3 million barrels of crude oil per day, of which 5.23 million is expected to come from Western Canada. Saskatchewan is expected to produce an average of 536,000 barrels of oil per day between 2015 and 20302.

1International Energy Agency
2Canadian Association of Petroleum Producers, Crude Oil Forecast, Markets & Transportation, June 2015

Provided below are examples of Resource investments within Westcap’s portfolio:

Resources

Agriculture

The economic environment in the farm sector has supported growth over the past 15 years. Agriculture is always evolving and average farm sizes have increased. Technology has expanded the productivity and efficiency and farm equipment has become larger and more complex. Since 1999, total farm cash receipts have increased 90%, while crop receipts have increased 127%.

The average value of farmland in Canada increased 14.3% in 2014, 22.1% in 2013 and 19.5% in 2012.   Saskatchewan led the way with 18.3% increase in value over 2013. In, fact, Saskatchewan has experienced double digit growth in land value in six of the last eight years, resulting in land prices more than tripling in value since 2006.

Technology has changed the way agriculture operates. New technologies like GPS and GMOs have revolutionized the seeding process and the types of crops grown. Farmers will continue to adopt new technologies in order to meet the pressures of increasing productivity demands to feed growing world populations.

The agriculture sector has always been a major economic driver throughout Saskatchewan’s history. World demographics indicate continued demand for sustained growth and technological advancements. Agriculture represents a significant growth opportunity that can provide strong investment opportunities.

Provided below are examples of Agriculture investments within Westcap’s portfolio:

Healthcare

Canadians on average are officially over-the-hill. The median age of the population of Canada as of July 1, 2015 was estimated at 40.5 years-old based on Statistics Canada and with the generation known as the baby boomers entering its senior years, the proportion of seniors is only expected to grow. For the first time in history, the number of Canadians aged 65 and over has exceeded the number of children. For example, Canada’s total population has grown at an annualized 1.06% for the past five years. Canadian people aged 65 years and older have increased at an annualized rate of 3.81% while Canadian people under 65 years-old have increased at an annualized rate of 0.58% over the same time period. Within the next two decades, it is estimated that the number of people over the age of 65 in Canada, as well as in Saskatchewan, will rise growing to almost 25% of the population.

Canadians on average have been getting older for decades. As the baby boomers aged over the past 60 to 70 years, their demands have fueled the growth of many new industries and created a number of opportunities for investors and entrepreneurs in everything from electronics, retailers, music, movies and information technology. Now that the baby boomers are moving into their senior years the attention has switched to their demands for healthcare.

While much of the healthcare industry is government owned and operated, there are a number of profitable ways to privately invest in healthcare. First, there are opportunities to invest in healthcare infrastructure, medical manufacturers and suppliers, and some private medical services. Second, there are opportunities to invest in healthcare-related new ideas. These include new drugs and therapies, chemical and mechanical diagnostics, and mechanical improvements for services. The aging population represents a significant increase in the demand for healthcare and a need for increased capacity.

Provided below are examples of Healthcare investments within Westcap’s portfolio:

Hospitality

In Saskatchewan, and in particular Regina and Saskatoon, the hospitality industry continues to grow revenues despite the impact of lower oil prices. Economic diversification among natural resources, construction, technology and agriculture continue to drive growth in Saskatchewan with tourism and infrastructure investment following.

Confidence in the industry is evident with the hotel construction boom going on in Regina and Saskatoon with 2830 new rooms constructed in the past 5 years anticipating the rebound of commodity prices.

Westcap has approached investment in the hospitality sector seeking companies with strong balance sheets that are able to weather economic cycles or consolidation opportunities made available when cash flow becomes tight by prolonged economic downturn. Westcap is committed to making capital investments to ensure a superior product offering.

With recent renovations, both of Westcap’s investments – the Regina Ramada Plaza and the Ramada Saskatoon – are well positioned to utilize their abilities to be a one-stop hotel for guest needs. This clearly gives the hotels a distinct advantage over all the new limited service builds in the market. ”The latest renovations to the banquet areas certainly give us an edge” says Mr. Darryl Caudle, Vice President of Hotel Operations for Westcap.

Provided below are examples of Hospitality investments within Westcap’s portfolio:

InfrastructureAs Canadian national and regional economies grow, the expanding populations will heavily rely on modern and expanded infrastructure. For a number of years, both federal and provincial governments have made concerted efforts to reduce the infrastructure deficit in Canada. In Saskatchewan, infrastructure investments of $2.7 billion have been made by the provincial government, with another $2.2 billion to come over the next four years. As well, the recently elected Federal Liberal Government announced its intention for significant new infrastructure spending amounting to an average of $9.5 billion annually over the next 10 years. Infrastructure companies include those that are involved directly or indirectly in the development, maintenance, servicing or management of infrastructure. Among other sectors, infrastructure can include health care, transportation, utilities, and energy.

Infrastructure is required to serve an area’s residents and businesses with the necessary services and facilities. Investment into housing and commercial developments often goes hand in hand with infrastructure investments and is required in order for the sustainable growth of an economy. Investments into housing are critical in increasing the quality of the housing supply as well as supporting home ownership. Saskatchewan has experienced strong population growth in recent years which has resulted in sharp increase in demand for quality housing. This increase in demand has provided numerous investment opportunities.

Provided below are examples of Infrastructure investments within Westcap’s portfolio:

Innovation

The Conference Board of Canada defines innovation as a process that creates and uses new ideas and knowledge to generate economic value. Innovation can be in radical, industry-destructive ideas that create new value chains and new businesses. Innovation can also be gradual and incremental through the improvement of existing product, services or business models. In either kind, there are great investment opportunities for the right investor.

The Prairie Provinces have a number of factors that make up a large but often overlooked potential for investments in the right innovation. Over 60% of the workforce in Alberta, Saskatchewan and Manitoba have graduated from a post-secondary institution1. The three Provinces each support new innovations and the minds that create them through research facilities, institutions and organizations such as start-up incubators and accelerators. These include the Saskatchewan Research Council, the Canadian Light Source, Innovation Place, Alberta Innovates Technology Futures, Innovate Calgary, Alberta Enterprise, the Banff Venture Forum, Innovate Manitoba, Manitoba Technology Accelerator, among others. The three Provinces also have active angel networks.

Innovation in Western Canada is focused in five main areas:

  • Biotechnology
  • Life Sciences
  • Chemical Engineering
  • Resource Extraction
  • Information Technology
1National Household Survey. Statistics Canada. (2011) CANSIM Table 109-0401.

Provided below are examples of Innovation investments within Westcap’s portfolio:

MBOIn Canada, a growing number of small to medium-sized enterprise owners are experiencing important decisions regarding the succession of their business. In the next decade alone, approximately 75% of small and medium-sized business owners will be ready to sell their business. Some of the key issues that these enterprise owners are facing with respect to succession planning include1:

• Only 9% of businesses have a formal, written succession plan
• More than 80% of small to medium-size enterprise owners plan on exiting their business due to retirement
• Almost 50% of business owners plan to sell to buyers unrelated to their family, while another 18% plan to sell to members of their family. Both of which are likely to require a third party source of transition financing.

A management buyout (MBO) provides business owners with the opportunity to execute an effective business succession plan, while providing key employees with the opportunity to meaningfully participate in the continued success of the business. An MBO is often viewed by customers, suppliers, employees and other stakeholders as a positive progression of the business, as the process attracts knowledgeable capital and strategic partners that can facilitate the process and support growth initiatives. MBO’s are more likely to achieve a successful business succession with an 80% success rate, while inter-family succession has only posted a 32% success rate2.

1Canadian Federation of Independent Business
2Canadian Association of Family Enterprise

Provided below are examples of Management Buyout investments within Westcap’s portfolio:

OilGasThe World Energy Outlook conducted by the International Energy Agency, estimates the global energy demand to grow by approximately 37% by 2040. While energy sources are expected to be more diversified, oil and gas is expected to account for approximately 50% of energy consumption1. With proven oil reserves of approximately 173 billion barrels, Canada has the third largest amount of proven oil reserves, next to Venezuela and Saudi Arabia. With the majority located in the Western Canadian Sedimentary Basin, Canada, particularly Western Canada will play a major role in meeting the demand growth.

Long-Term

Moving forward, crude oil production in Western Canada is expected to grow annually by approximately 156,000 barrels per day from 2015 to 2020. By 2030, Canada is expected to produce approximately 5.3 million barrels of crude oil per day, of which 5.23 million is expected to come from Western Canada. Saskatchewan is expected to produce an average of 536,000 barrels of oil per day between 2015 and 20302.

1International Energy Agency
2Canadian Association of Petroleum Producers, Crude Oil Forecast, Markets & Transportation, June 2015

Provided below are examples of Resource investments within Westcap’s portfolio: