Canada Growth Fund Inc. has made a CAD 50m commitment to Idealist Climate Impact Fund LP, a fund managed by Montreal-based Idealist Capital, an investment manager pursuing commercialization stage growth equity investment opportunities in the energy transition.
The partnership, CGF’s first investment in Quebec, is an initial step in its strategy to develop a more resilient ecosystem of growth-stage cleantech financial investors in Canada, according to a news release. The strategy includes creating partnerships with select investment fund managers who can lead capital raises and provide active asset management support to Canadian cleantech companies at the critical commercialization and scale-up phases where new products, technologies, and services begin creating value.
CGF’s first investment in a cleantech fund is in keeping with its mandate to foster growth and innovation in the Canadian clean technology sector. In Canada, growth-stage cleantech capital raises are challenging and generally small by virtue of the size of the market and an insufficient number of financial sponsors with enough funds to actively pursue such investment opportunities. This results in less capital available to Canadian entrepreneurs looking to accelerate the commercialization of their products, technologies and services, and longer times to close capital rounds. CGF has identified this gap as an important market deficiency holding back Canadian cleantech companies and project developers today.
Through its cleantech funds strategy, CGF aims to provide further credibility and investable capital to Canadian managers to speed up the growth of targeted companies, the press release states. CGF will also encourage managers and portfolio companies to adopt best-in-class ESG practices. CGF believes that supporting select managers should, over time, lead to a higher volume of quality opportunities across the Canadian market and attract more sophisticated investors to Canadian cleantech companies.
“Today’s investment underscores CGF’s strategic role in Canada’s cleantech market, as a catalytic investor seeking to accelerate the growth of promising Canadian cleantech companies,” said Patrick Charbonneau, President and CEO of the Canada Growth Fund Investment Management team. “By supporting growth-stage cleantech managers, CGF is expanding access to capital in the Canadian market and playing an important role in supporting partners positioned to provide strategic direction and capital markets expertise.”
Idealist is an experienced team of investors with a track record of supporting the growth of cleantech businesses. The Fund’s strategy is focused on themes that fit well with CGF’s cleantech investment strategy, including the decarbonization of power supply, electrification of transportation, decarbonization of industrials, and promotion of a circular economy. Through this fund commitment, CGF is looking to position itself as a partner of choice to provide further support to companies with sizeable investments needs.
“Idealist is enthusiastic to partner with the Canada Growth Fund to accomplish our common goal of creating value for Canadians as we navigate the energy transition,” said Pierre Larochelle, Co-Managing Partner at Idealist. “With today’s commitment from CGF, we’re able to support much larger capital rounds and move faster to bring capital into the growing energy transition ecosystem to the benefit of Canadian entrepreneurs,” said Steeve Robitaille, Co-Managing Partner.
This transaction builds on CGF’s successful first few months of operations, including its recent investments in Eavor Technologies Inc., a Canadian geothermal energy company, and Entropy Inc., a developer of technologically-advanced carbon capture and sequestration projects. CGFIM can deliver complex transactions such as these by leveraging PSP Investments’ rigorous and established processes and arm’s length governance model.
