Canada Growth Fund Invests in Svante and MKB Fund III With BDC, CDPQ and IQ
Svante, a Vancouver, B.C.-based carbon capture and removal project developer, will see C$137 million (US$100 million) in federal funding to accelerate its commercial-scale projects in Canada and the U.S.
Funded through Canada Growth Fund Inc., the money builds on the C$198.65 million (US$145 million) Svante is investing in its new carbon capture and removal filter manufacturing facility under construction in Burnaby, B.C.
“The Canada Growth Fund’s investment in Svante will help drive the kind of economic growth we need and keep Canada on track to net-zero by 2050,” said Deputy Prime Minister and Finance Minister Chrystia Freeland in a press release.
“By investing in cutting-edge Canadian innovators, we are decarbonizing industries and making energy more affordable, while reducing emissions and creating good-paying jobs.”
The 141,000 sq. ft. facility is expected to produce enough filters to capture 10 million tonnes of carbon dioxide (CO2) annually. It’ll be paired with the company’s global headquarters and research and development centre, supporting approximately 300 jobs.
The C$137 million investment is expected to secure the company’s Canadian-based future and reduce emissions from heavy industries in Canada and around the world.
Half of the money, or C$68.5 million (US$50 million), is available to Svante up front, and a matching portion will be available for the company to draw on for future carbon capture, utilization, and storage projects (CCUS).
CCUS is a suite of technologies that captures CO2 emissions to either safely store them, or use in other industrial processes, such as permanent mineralization in concrete.
“As we look to address the climate crisis, countries and companies that are thoughtful and strategic will look to seize the opportunities that a low-carbon future presents,” said Jonathan Wilkinson, Minister of Energy and Natural Resources, in the release.
“Companies such as Svante are rapidly moving to use policy tools available to them to generate economic growth and create good jobs now and into the future.”
Svante is a leading Canadian clean tech company that manufactures filters and carbon capture machines capable of trapping and removing CO2 from heavy-emitting industries, such as cement, steel, hydrogen, and oil and gas.
The Canada Growth Fund is a $15-billion arm’s length public investment vehicle launched by the federal government to attract private capital and invest in Canadian projects and businesses, which is led by Canadian public sector pension professionals.
And Alex Riehl of Betakit reports MKB raises $145 million for third cleantech fund mostly from government agencies:
Montréal-based growth equity firm Mackinnon, Bennett & Company (MKB) has closed $145 million from government investment agencies for its third cleantech fund.
A statement from the federal Canada Growth Fund (CGF) said that it is contributing $50 million to the fund, public pension and insurance investor Caisse de dépôt et placement du Québec (CDPQ) and Investissement Québec (IQ) are investing $35 million each, while the Business Development Bank of Canada (BDC), a Crown corporation, is providing the remaining $25 million.
MKB Fund III will target North American growth-stage businesses that are commercializing emission-reduction technologies in MKB’s areas of focus, which includes clean energy, mobility, built environment, and industrials, CGF said in the statement.
The statement from CGF is the first official acknowledgement of a third MKB fund. According to Private Capital Journal, MKB launched Fund III with an initial $158-million close in March 2024. BetaKit has reached out to MKB for more information.
BDC has led both of MKB’s previous funds, while CDPQ and IQ also led MKB’s Fund II as part of the investor syndicate. MKB Fund II targeted $150 million, but ended up closing with $175 million in 2021 to invest in late venture and early growth-stage companies focused on the electrification, decarbonization, and digitization of transportation and energy.
“The Fund’s orientation on late and growth-stage opportunities responds to a critical need in the Canadian market, supporting the often-complex capital requirements of homegrown cleantech ventures and facilitating their expansion,” BDC senior vice-president Paula Cruickshank said in a statement. “This is exactly the kind of market gap BDC is designed to address.”
CGF is a $15-billion fund launched in 2022 with a mandate to invest in scaling Canadian clean technology businesses in the commercialization stage. In its 2023 budget, the federal government announced that the Public Sector Pension Plan Investment Board (PSP Investments) was managing the fund. Last week, the CGF backed Burnaby, BC-based cleantech company Svante with a $137-million CAD ($100-million USD) financial commitment in the form of a convertible note.
MKB’s portfolio includes carbon removal startup CarbiCrete, electric scooter company Bird, and traffic management company Miovision. Telus bought out MKB’s share of Miovision for $52 million in April 2023.
CDPQ issued a joint press release stating Canada Growth Fund, CDPQ, Investissement Québec and BDC Capital invest $145 million in MKB’s Third Energy Transition Fund:
The Canada Growth Fund (CGF), CDPQ, Investissement Québec (IQ) and BDC Capital (BDC) are pleased to announce their $145 million commitment to MKB, a Québec growth equity firm investing in companies that are leading the energy transition. As part of this transaction, CGF will commit up to $50 million to MKB Partners Fund III, L.P. (Fund III), while CDPQ and IQ will each be investing $35 million, and BDC, $25 million.
MKB is currently raising its third fund to help scale fast growing and innovative companies, primarily in North America. Fund III will target growth-stage businesses which are commercializing proven, innovative emission reduction technologies in MKB’s areas of focus, which include clean energy, mobility, built environment and industrials.
“Through its cleantech funds strategy, CGF is seeking to provide further investable capital to Canadian managers to speed up the growth of Canadian cleantech champions,” said Patrick Charbonneau, President and CEO of Canada Growth Fund Investment Management Inc. “CGF is pleased to invest $50 million in MKB’s energy transition fund to scale the impact of its strategy and to foster growth and innovation in the Canadian clean technology sector.”
“This additional investment in MKB—a Montréal-based firm focused on accelerating the energy transition—not only positions our capital in a promising and profitable sector for our economy, but also confirms our ambition to encourage the sustainable growth of companies,” said Kim Thomassin, Executive Vice-President and Head of Québec at CDPQ. “It’s an opportunity for us to support climate technology that will have an impact on decarbonization and will shape our future.”
“Along with key partners in Québec’s financial ecosystem, Investissement Québec is proud to take part in this round initial closure, which is completely in line with its mission. Acting in a sector that is strategically important for the sustainable development of our economy, MKB Partners Fund III will help consolidate the capital chain and accelerate investments in the energy transition” said Bicha Ngo, President and CEO, Investissement Québec.
“BDC is delighted to co-anchor MKB’s third fund, recognizing the team’s commitment to Canadian clean technology companies and the clear alignment with our corporate values,” added Paula Cruickshank, Senior Vice-President, Fund Investments, BDC Capital. “The Fund’s orientation on late and growth-stage opportunities responds to a critical need in the Canadian market, supporting the often-complex capital requirements of homegrown cleantech ventures and facilitating their expansion. This is exactly the kind of market gap BDC is designed to address.”
ABOUT CGF
CGF is a $15 billion arm’s length public investment vehicle that helps attract private capital to build Canada’s clean economy by using investment instruments that absorb certain risks, in order to encourage private investment in low carbon projects, technologies, businesses, and supply chains.
Further information on CGF’s mandate, strategic objectives, investment selection criteria, scope of investment activities, and range of investment instruments can be found on www.cgf-fcc.ca.
ABOUT CANADA GROWTH FUND INVESTMENT MANAGEMENT
In Budget 2023, the Government of Canada announced that PSP Investments, through a wholly owned subsidiary, would act as investment manager for CGF. Canada Growth Fund Investment Management has been incorporated to act as the independent and exclusive investment manager of CGF.
ABOUT CDPQ
At CDPQ, we invest constructively to generate sustainable returns over the long term. As a global investment group managing funds for public pension and insurance plans, CDPQ works alongside its partners to build enterprises that drive performance and progress. We are active in the major financial markets, private equity, infrastructure, real estate and private debt. As at June 30, 2024, CDPQ’s net assets totalled CAD 452 billion. For more information, visit cdpq.com, consult our LinkedIn or Instagram pages, or follow us on X.
CDPQ is a registered trademark owned by Caisse de dépôt et placement du Québec and licensed for use by its subsidiaries.
ABOUT IQ
Investissement Québec’s mission is to play an active role in Quebec’s economic development by stimulating business innovation, entrepreneurship, and business acquisitions, as well as growth in investment and exports. Operating in all the province’s administrative regions, the Corporation supports the creation and growth of businesses of all sizes with investments and customized financial solutions. It also assists businesses by providing consulting services and other support measures, including technological assistance available from Investissement Québec Innovation. In addition, through Investissement Québec International, the Corporation prospects for talent and foreign investment, and assists Québec businesses with export activities.
ABOUT BDC
As Canada’s bank for entrepreneurs, BDC is a partner of choice for all entrepreneurs looking to access the financing and advice they need to build their businesses and tackle the big challenges of our time. Our investment arm, BDC Capital, offers a wide range of risk capital solutions to help grow the country’s most innovative firms. We are one of Canada’s Top 100 Employers and Canada’s Best Diversity Employers. BDC was the first financial institution in Canada to receive the B Corp certification in 2013 and it is the B Corp movement’s national partner in Canada. For more information on BDC’s products and services and to consult free tools, templates and articles, visit bdc.ca or join BDC on social media.
As you can read, things are moving fast at the Canada Growth Fund (CGF), they are making great investments in cleantech companies and funds along with their strategic partners in Quebec.
A little reminder, even though the CGF was funded by the federal government to accelerate investments in the transition economy, it is managed independently from government at PSP Investments by Patrick Charbonneau (CEO) and his team.
Below, you can read about the mandate and focus of the CGF:
I also recommend you read a corporate presentation here to appreciate all the CGF has done to date.
The latest investments in Svante and the MKB Fund III along with the BDC, CDPQ and IQ are completely in line with their mission and focus.
Svante is a leading Canadian clean tech company that manufactures filters and carbon capture machines capable of trapping and removing CO2 from heavy-emitting industries, such as cement, steel, hydrogen, and oil and gas.
And MKB is currently raising its third fund to help scale fast growing and innovative companies, primarily in North America. Fund III will target growth-stage businesses which are commercializing proven, innovative emission reduction technologies in MKB’s areas of focus, which include clean energy, mobility, built environment and industrials.
Why go through MKB and not do everything on their own?
Well, because they have to deploy $15 billion relatively fast and if they can find the right strategic partners to help them deploy in this area, they'd be foolish not to use funds where warranted.
BDC has led both of MKB’s previous funds, while CDPQ and IQ also led MKB’s Fund II as part of the investor syndicate. MKB Fund II targeted $150 million, but ended up closing with $175 million in 2021 to invest in late venture and early growth-stage companies focused on the electrification, decarbonization, and digitization of transportation and energy.
I was also happy to read that Paula Cruickshank was promoted to Senior Vice-President, Fund Investments, BDC Capital, taking over from Alison Nankivell.
Paula joined the BDC back in 2009, a year after I joined that organization, as Vice President, Securitization, taking over the management of the Canadian Secured Credit Facility, a $12-billion Government of Canada program to help restart the asset-backed securities market following the 2007-2009 financial crisis.
She's a smart cookie with tons of experience (read more about her here) and I'm sure she will do a great job leading BDC Capital.
I can say the same about Bicha Ngo, President and CEO at Investissement Québec, she has a stellar reputation and was in charge of private equity there before assuming the role of President & CEO.
And Kim Thomassin, Executive Vice-President and Head of Québec at CDPQ continues to deliver great results in that strategic portfolio and she too is a great leader.
When you have strong strategic partners like that right in your backyard, well, it's easy for Patrick Charbonneau and his team to tap into their knowledge, skills and contacts.
To be clear, the CGF can go it alone or it can invest alongside strategic partners throughout Canada when it makes sense (spreading the risk).
Alright, let me wrap it up there.
Below, world is in the midst of a climate crisis, with carbon emissions – currently emitting at a rate that our natural ecosystems cannot absorb – proving particularly concerning. Sustainable methods and innovations are being developed to overhaul existing techniques or structures, but Canadian-based company, Svante, is working to establish a carbon management system that will help to the world that will enable a positive future.
Watch this interview with CEO Claude Letourneau, he provides great insights on this amazing company.
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