BDC Capital is ramping up efforts to bring in institutional investors as partners, as the Canadian government-owned venture capital firm seeks to increase its footprint in fast-growing industries such as clean tech.
A “sort of key theme that we’re pursuing is also how do you get other private sector funders to co-invest with us so that they benefit the ecosystem as a whole,” said Lally Rementilla, managing partner of BDC Capital’s intellectual property-backed financing fund. “As an example, in the clean tech and sustainability space, there is a lot of focus on, ‘How do you bring the state pension funds to come in and invest with us?’"
BDC Capital, the investment arm of the Business Development Bank of Canada established by the country’s government in 1944, has around $5.7 billion (US$4.4 billion) of assets under management, with roughly $1.5 billion available to be deployed. The firm directly invests in companies in fast growing industries such as agricultural technology and cybersecurity through its direct funds, as well as with investments in 110 third-party venture capital funds.
Canada is partly relying on technology and innovation to help meet ambitious climate change goals. The country has pledged to reduce greenhouse gas emissions between 40 per cent and 45 per cent below 2005 levels by 2030, and is already positioned to cut emissions by about 36 per cent, the government said in March before selling an inaugural green bond. Canada’s government has been progressively adding mechanisms to deliver on its 2030 emissions target, including imposing a national carbon tax and providing a refundable tax credit for businesses that invest in carbon capture and storage.
BDC Capital’s existing investments include long-duration energy storage solutions provider Hydrostor Inc., which earlier this year got a US$250 million preferred equity financing commitment from Goldman Sachs Asset Management. Other portfolio companies include General Fusion Inc., which is developing a commercially-viable fusion power plant.
“What we’re trying to do is develop Canadian technology that will enable to deploy those technologies in Canada and to reduce carbon footprint, and export that capability outside of Canada,” BDC Capital Executive Vice President Jérôme Nycz said in an interview. “The reduction of gas emissions is a key priority for the government.”
Among plans for the coming months, BDC Capital is looking to increase its allocation to clean tech investments and is also planning to reopen a $200 million vehicle focused on investments in women-led tech companies, he said.