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Effort underway to spur Arctic investment

Speaking at an Arctic conference in Anchorage Tuesday, a managing partner of a global investment firm said the Arctic presented "massive" investment opportunity and pitched an as-yet-unveiled protocol to attract would-be investors and guide investment in the region.

Scott Minerd, global chief investment officer at Guggenheim Partners, a Chicago- and New York-based investment firm, said an Arctic investment protocol -- a set of principles to which would-be investors would adhere on a voluntary basis -- would help convince more investors to direct their money to the Arctic while maintaining corporate standards of social and environmental responsibility.

"It's apparent to me that the opportunity in the Arctic is massive and the need is massive," he said. "While we believe the private sector has much to add, it cannot do it alone."

Committing to the protocol would be a pre-condition for borrowing from what Minerd envisions as an enormous financial fund shared by the public and private sectors, and devoted exclusively to Arctic-based projects.

Minerd made the presentation at the "The Alaskan Arctic: A Summit on Shipping and and Ports," a conference organized and sponsored by Alaska Dispatch News publisher Alice Rogoff.

The protocol will include principles such as preserving the Arctic environment, engaging with local and indigenous communities and adopting responsible business practices, Minerd said.

Guggenheim Partners plans to officially unveil the Arctic investment protocol in January and debut a continually updated database of current and future Arctic investment opportunities next year as well. The firm will also begin the process of raising what he envisions as tens of billions in capital for a permanent Arctic investment vehicle.

The protocol appears to leave some issues unresolved, by Minerd's own admission. Under its definition of the Arctic, which he did not discuss, what projects would qualify for access to the fund? Would the project need to be located or operating primarily within the Arctic Circle or in an Arctic nation? Would entities with poor track records of corporate social responsibility outside the Arctic be allowed to access the fund? How would the fund determine whether the protocol had been violated and, given that the protocol is not legally binding, how would it oversee and punish violators?

Minerd's chief of staff did not immediately respond to an email request for follow-up comment.

Another presenter, Hugh Short, chairman and CEO of Anchorage-based investment firm Pt Capital, whose advisory board includes Rogoff, suggested Alaska could shore up the state's ability to invest in the Arctic by selling off certain state assets to private companies in order to raise revenue, a strategy sometimes used by governments to make up for budgetary shortfalls.

Michael Catsi, director of business development and communications at the Alaska Industrial Development and Export Authority, said the decision to sell one of its several assets, which include the FedEx aircraft maintenance facility at the Ted Stevens Anchorage International Airport and the Ketchikan shipyard, would depend on the terms of the sale, prior obligations to any bondholders and whether the Legislature or Gov. Bill Walker approved it.

"At this point, it's theory, but it is possible, subject to any legal restrictions we may have," Catsi said.

Catsi said no one at the AIDEA office can recall an AIDEA asset that was privatized or sold off in order to raise funds. He noted that if sold, an asset would have to command a fair price and the new private-sector owner would need to ensure users would enjoy cost reductions or improvements in value.

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