On Monday (April 27), Prime Minister Mark Carney and this Government of Canada Canada Strong Fund launched.
The fund is the country’s first attempt to create a sovereign wealth fund, similar to Norway and Saudi Arabia.
However, this fund will not work like Norway or Saudi Arabia, whose funding is achieved either through high taxation or resource nationalism.
Instead, the government said it would invest 25 billion Canadian dollars over three years in the fund and partner with both domestic and foreign private sector investors to grow the fund and generate long-term returns.
Capital from the fund will be allocated to investments with the highest potential for returns, with a focus on projects in conventional energy, critical minerals, agriculture and infrastructure.
The new initiative aligns closely with the goals of the Major Projects Office, which was formed last September to focus on developing projects in the national interest.
To date, two tranches of projects have been announced and include support for the completion of LNG Canada phase 2 in Kitimat, British Columbia; Eldorado Gold (TSX:ELD,NYSE:EGO) McIlvenna Bay Copper Project in Saskatchewan and Canada Nickel (TSXV:CNC,OTCQX:CNIKF) Crawford Project near Timmins, Ontario.
“The new Government of Canada is catalyzing a range of nation-building projects in energy, trade, critical minerals, transportation, data and beyond – projects that will make Canada stronger, more resilient and more independent. Through the Canada Strong Fund, all Canadians will have the opportunity to share directly in these benefits. This is our country, this is your future, and we are building it together,” said Prime Minister Carney.
In addition to government and private sector investment, the PM’s Office said it will encourage Canadian investment by creating retail investment products.
Details of how the retail product will work have not been provided; However, the government release said the product will be accessible to all Canadians, easy to purchase and the initial investment capital will be secure.
The release also said the government will consult on the nature of the product in the coming months. To do this, it will create the Canada Strong Fund Transition Office, which will meet with market participants and regulators to finalize the fund in the coming months.
in his statementThe Prime Minister said the fund would function like “a national savings and investment account” and that retail investments would allow regular Canadians to participate in its growth.
Although the Prime Minister did not comment on specifics, he said the focus would be on, but not limited to, national-interest projects and could eventually be expanded to include Canadian-owned international projects.
Asked how it would differ from the Canadian Infrastructure Bank, Carney said it would focus on equity returns rather than returns from interest on loans.
The government said more details will come starting on Tuesday (April 28) when it presents its spring economic update. That update will also provide an overview of foreign direct investment into the Canadian economy.
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Securities Disclosure: I, Dean Belder, do not have any direct investment interest in any of the companies mentioned in this article.
