* Ex CPPIB boss Wiseman says fund can be catalyst for growth
* Fund worth C$500 mln initially, could rise to C$1 bln
* Similar UK fund has proved successful
* Fund will take minority stakes and invest over long-term
* Pension funds could also invest -CIBC CEO
(Adds comments from former CPPIB CEO Mark Wiseman)
By Matt Scuffham and Alastair Sharp
TORONTO, March 9 Canada's major banks and
insurers said on Thursday they planned to create a fund to
invest up to C$1 billion ($740 million) in small but growing
Canadian firms, part of measures to boost economic growth.
The fund has been set up to bridge a gap in lending to
companies that have already begun trading but are looking for
additional investment to increase their operations. It is one of
a number of recommendations to stimulate Canada's economy made
by advisers to Finance Minister Bill Morneau.
"These are high-performing firms and these firms are going
to create high-quality jobs in Canada," said Mark Wiseman, the
former chief executive of the CPPIB, Canada's biggest public
pension fund, who sits on Morneau's Advisory Council.
"What the business growth fund will do is catalyse them," he
added in an interview. "If they get through that phase of their
development, they'll be able to continue to grow by accessing
more traditional sources of financing."
The fund is expected to have an initial capital commitment
of more than C$500 million. Initial participants will include
the country's six major banks, as well as insurance companies,
although a range of financial institutions will be able to
invest in the fund when it is formed.
A similar entity has proved successful in Britain, having
been set up in 2011 with 2.5 billion pounds of funding by the
UK's five biggest banks. It has so far invested more than 1
billion pounds in over 160 companies and was the seventh-busiest
private investor in the world in 2016, based on deals completed.
Victor Dodig, chief executive of Canadian Imperial Bank of
Commerce, who was one of the earliest supporters of the
initiative and played a prominent role in setting up the fund,
said it could expand beyond C$1 billion.
"I'm pretty confident that the first initial tranche is
necessary, and then from that we will find out how much more is
needed," he said in an interview. "What we wanted to do is get
things going. Part of this is getting traction."
Dodig said Canada's biggest pension funds could also invest.
The fund will take minority stakes in companies across
different sectors, with typical investments ranging between C$3
million and C$20 million per company. Businesses will also have
access to a mentorship network.
"Canada's very good at start-ups; our challenge is in
growing them to a certain size," said Hendrik Brakel, senior
director for economic, financial and tax policy at the Canadian
Chamber of Commerce, which represents Canadian businesses.
Royal Bank of Canada Chief Executive Dave McKay said
the fund will meet a demand by smaller businesses for "patient
capital," investing in companies for several years to help them
weather short-term economic headwinds and generate long-term
"Most importantly, they're looking for support and advice
and mentorship to help them navigate the growth challenges that
so many companies face," he said.
The fund will be managed independently, with a board made up
of independent directors and representatives from initial
investors. It plans to have a leadership team in place to start
deploying capital within the next year.
Finance Minister Morneau said the initiative "will help
ambitious Canadian companies get the capital they need to grow
and succeed globally."
($1 = 1.3514 Canadian dollars)
(Additional reporting by Leah Schnurr; editing by Jonathan
Oatis and Dan Grebler)