The Fonds de solidarité has also indicated that while it considers financing requests from all Québec enterprises, organized and unorganized, it will give preference to projects where workers are FTQ members.
Like other venture capital institutions, the Fonds de solidarité conducts an exhaustive process of due diligence whereby it examines all aspects of a potential investee company's attributes and prospects in the market. Along with analyzing business plans and financial data, the investment team interviews firm owners/managers, workers and other interested parties (e.g., suppliers). Questions emerging from this evaluation contribute to subsequent negotiations and, possibly, terms and conditions to be included in a final investment agreement.
In general, the Fonds de solidarité concludes (after also finishing its social audit, et al — see below) with an equity infusion of between 20-40 percent and representation on the board of directors. It usually looks to exit an investment after five to ten years, on balance.
While the Fonds de solidarité prefers minority voting shares in a firm, it will sometimes assume temporary control in specific circumstances, such as costly restructurings projects or where financial distress threatens continuation of an enterprise deemed central to the Québec economy.
The Fonds de solidarité receives a flow of investment referrals in a manner similar to other venture capital institutions. Over the years, the fund has leveraged numerous transactions involving financial syndication as well as following others into co-investment. The fund co-invests with a wide range of Québec-based financial institutions, such as the Caisse de dépot et placement, the Confederation caisse populaires Desjardins, and the Banque nationale and, on occassion, those that are internationally-based.
A significant source of information about potential deals is the FTQ and its affiliated unions and members. In 1994, the Fonds de solidarité received over 300 financing requests and proposals from entrepreneurs and enterprises across Québec.
An important financial innovation of the Fonds de solidarité in recent years has been its network of specialized, regional and local funds. These pools of equity, levered into existence by the Fonds de solidarité, often through financial/industrial partnerships function with independent mandates. In 1995, there were 26 funds in this network, valued at $154 million in total.
Specialized funds primarily serve Québec growth-oriented industries. Aérocapital, Fonds agro-forestier, Biocapital I and II, Envirocapital and Technocap, for instance, finance small dollar projects in high technology and specialized manufacturing while Solim I and II are interested in construction and real estate projects.