Prime Minister Carney Launches C$25 Billion Canada Strong Fund

On Monday (April 27), Prime Minister Mark Carney and the Government of Canada introduced the Canada Strong Fund.

The fund is the country’s first attempt at creating a sovereign wealth fund, similar to those held by Norway and Saudi Arabia.

However, the fund will not function like Norway’s or Saudi Arabia’s, whose funds have been achieved through either high taxation or resource nationalism.

Instead, the government said it will seed the fund with a C$25 billion investment spread over three years and partner with both domestic and foreign private-sector investors to grow the fund and generate long-term returns.

The capital from the fund will be allocated for investments with the highest potential for return, with a focus on projects in conventional energy, critical minerals, agriculture and infrastructure.

The new initiative closely aligns with the goals of the Major Projects Office, which was formed last September to focus on developing projects in the national interest.

So far, two tranches of projects have been announced and have included support for the completion of LNG Canada’s Phase 2 in Kitimat, British Columbia; Eldorado Gold's (TSX:ELD,NYSE:EGO) McIlvenna Bay copper project in Saskatchewan, and Canada Nickel's (TSXV:CNC,OTCQX:CNIKF) Crawford project near Timmins, Ontario.

“Canada’s new government is catalyzing a series of nation-building projects in energy, trade, critical minerals, transport, 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 investments, the PM’s office said it would encourage Canadian investment by creating a retail investment product.

Details on how the retail product will function have not been made available; however, the government release noted that the product will be accessible to all Canadians, easy to purchase and that the initial investment capital will be protected.

The release also stated that the government will consult on the nature of the product over 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 statements, the Prime Minister added that the fund will operate like “a national savings and investment account,” and that retail investment in it will allow regular Canadians to participate in its growth.

While the PM didn’t comment on specifics, he said the focus would be on national-interest projects, but it wouldn’t be limited to them and may eventually expand to include Canadian-owned international projects.

When asked how it will differ from the Canadian Infrastructure Bank, Carney said it will focus on equity return instead of returns from interest on loans.

The government said more details will follow, starting on Tuesday (April 28) when it tables its Spring Economic Update. That update will also provide an overview of foreign direct investment in the Canadian economy.

Don't forget to follow us @INN_Resource for real-time updates!

Securities Disclosure: I, Dean Belder, hold no direct investment interest in any company mentioned in this article.