Canada’s banks, pension funds earmark billions for investment in critical sectors

Several of Canada’s largest banks and pension funds are pledging billions of dollars in new investment and financing in the country ahead of a major summit next week led by Prime Minister Mark Carney.

Bank of Montreal said Friday that it will deploy up to $70-billion in new capital over 10 years for sectors considered critical to Canada’s economy. The bank said its plan is aimed at supporting Canada’s economic security and resilience.

BMO will focus on key industries, including electricity, energy and transportation infrastructure, mining and critical minerals, AI computing, defence and security, and oil and gas. The capital will be issued through bank financing, debt capital markets activity and the raising of public equity.

The bank’s chief executive officer, Darryl White, said foreign investors are most interested in projects that they can get involved in quickly and will offer the best returns.

“It’s very important that we’ve turned the tone in Canada to a build-first and an open-for-business-first tone, which is very inviting to the rest of the world,” Mr. White said in an interview. “And you’re seeing it now in the [foreign direct investment] that’s turning our way.”

Early next week, hundreds of the world’s top financial-sector CEOs and senior executives will gather in Toronto for the inaugural Canada Investment Summit. Mr. Carney and two Canadian pension funds are staging the event as part of a push to attract more foreign investment to the country.

Over the past year, there have been persistent calls for Canada’s six biggest banks to increase lending for small- and medium-sized business, and for pension funds to add to their investments in the country.

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Major Canadian pension funds have signalled a desire to do more domestically, but also emphasized their mandates to invest wherever they can get the best returns for plan members with the least risk.

Ontario Teachers’ Pension Plan announced Friday that it aims to invest an additional $10-billion in Canada by the end of 2027, increasing the size of its $100-billion domestic portfolio.

The $303-billion pension fund said the new investments will be in both publicly traded equities and private assets that “meet its return objectives.” That could include capital to help Canadian companies grow as well as backing for infrastructure projects.

Teachers CEO Jo Taylor said the plan has already added about $1.5-billion of assets in Canada to its portfolio over the past few months.

International investors attending the summit in Toronto are looking to gauge “the level of optimism and conviction that exists around local investors,” Mr. Taylor said in an interview. “And I think it is an appropriate time for Teachers to actually try and articulate in a clear way how we see that ambition.”

“We do intend to keep on investing proactively in in Canada,” he added.

Earlier this week, the $321-billion Public Sector Pension Investment Board said it is aiming to increase its investments in the country by roughly one-third, from $72.4-billion to $100-billion, over the next few years.

In April, the $152-billion Ontario Municipal Employees Retirement System (OMERS) was the first major Canadian pension investor to say it would add at least $10-billion in new domestic investments over the next five years.

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Sun Life Financial Inc. also announced an infrastructure investing initiative Friday that seeks to deploy $5-billion over five years to “support Canada’s economic growth and resilience, while delivering long-term returns,” the company said in a statement.

The initiative plans to focus on critical infrastructure including digital technology, energy, transportation and logistics.

“At its core, the commitment we are announcing today underscores our belief that a stronger, more competitive Canada benefits everyone,” Sun Life CEO Kevin Strain said in a statement.

Earlier this month, Royal Bank of Canada announced it is launching a $1.4-billion fund aimed at investing in Canadian technology companies, including aerospace and dual-use defence companies, whose products also have non-defence applications.

Canadian Imperial Bank of Commerce is committing $2-billion over five years for small- and medium-sized defence-related and dual-use businesses as Ottawa spends to boost the country’s military base. And Bank of Nova Scotia has announced it is planning to issue Canadian defence bonds to help raise capital for companies.