Brookfield, CPPIB to launch $50-billion fund to invest in strategic sectors, sources say

The Canada Pension Plan Investment Board and Brookfield Asset Management Ltd. are jointly launching a $50-billion “Maple Fund” that will make major investments in infrastructure and key sectors in Canada, two sources said Monday.

Brookfield and CPPIB will each put up as much as $25-billion over the next five years to make equity investments in sectors that Canada considers strategic, as well as critical infrastructure projects, the sources said.

The Globe and Mail is not identifying the sources because they are not authorized to discuss the agreement publicly.

Spokespeople for CPPIB and Brookfield each provided statements from their respective CEOs that confirmed plans for the fund when The Globe contacted them for comment, but did not offer details.

“Canada is entering a period of new ambition to advance major projects and build for the future, creating compelling investment opportunities across the country,” CPPIB chief executive officer John Graham said in an e-mailed statement.

Each investment made through the Maple Fund will be worth at least $5-billion, and structured so that each partner holds 50 per cent of the equity, the sources said. The money deployed through the Maple Fund is intended to be over and above CPPIB’s and Brookfield’s normal investing activity.

An announcement is expected at Tuesday’s Canada Investment Summit, a two-day event led by Prime Minister Mark Carney.

The joint agreement will pave the way for large-scale transactions led by Brookfield, one of the world’s largest asset managers with more than US$1-trillion, and Canada’s largest pension fund, which invests $864-billion in assets on behalf of more than 22 million Canadians.

Mr. Graham is a co-organizer of the Canada Investment Summit taking place in Toronto on Monday and Tuesday. Mr. Carney was head of transition investing at Brookfield, as well as the asset manager’s board chair, before he stepped down from those roles to run for public office.

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The Maple Fund is intended to invest in large projects with complex development needs, and will be set up so that other investors can partner with CPPIB and Brookfield on investments on a case-by-case basis, the sources said.

Brookfield Asset Management CEO Connor Teskey said in an e-mailed statement that the Maple Fund “brings together two companies with a shared commitment to investing in the country’s future.”

“By combining CPP Investments’ scale and long-term capital with Brookfield’s development and operating capabilities, we believe the Maple Fund can help drive a generational investment program to invest in critical infrastructure, industries and businesses that will support the growth of globally competitive Canadian businesses,” he said.

Both CPPIB and Brookfield will independently assess and underwrite each deal, and the five-year timeframe is intended to be an initial commitment.

It is understood that there will not be fees or carried interest charged on investments that the two partners make through the fund, one of the sources said.

The joint agreement between CPPIB and Brookfield is among the most significant of several plans to increase investment in Canada that major banks and pension funds have announced in recent days, in the lead-up to the summit.

“CPP Investments has the capital, long-term investment horizon and expertise to pursue these opportunities, and the Maple Fund brings together our strengths with Brookfield’s strong origination and development capabilities to help move ambitious projects from opportunity to investment,” Mr. Graham said in his statement.

The Maple Fund “positions us well to meet this moment and move with speed on opportunities of unusual scale and complexity when they offer compelling value for the CPP Fund,” he said.

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Two years ago, Brookfield privately floated an exploratory proposal to launch a $50-billion fund that would have sought to raise capital from major Canadian pension funds and from Ottawa.

Since then, the concept has changed and evolved, resulting in the equal partnership that will soon be announced, one of the sources said. And discussions between CPPIB and Brookfield predated Ottawa’s announcement of the Canada Investment Summit.