Toronto-Dominion Bank is joining several Canadian and global institutions to back what is expected to be Canada’s largest clean technology venture fund.
The bank is anchoring the second fund from Toronto-based cleantech financiers ArcTern Ventures, which has raised $165-million to date. Drew MacIntyre, vice-chair and head of global energy with TD Securities Inc., didn’t disclose the size of the bank’s investment but said it was a “material” portion of the fund. Other backers of the latest fund include the Ontario Municipal Employees Retirement System, Norwegian energy giant Equinor ASA (formerly Statoil), Suncor Energy Inc., Business Development Bank of Canada and the Ivey Foundation.
It’s the first time TD, a big funder in Canada’s energy sector, has invested in a cleantech fund, Mr. MacIntyre said. The commitment is part of a larger, long-term initiative by the bank launched in 2018 called The Ready Commitment. The initiative earmarks $100-billion to fund renewable and clean energy technologies, businesses and processes through lending, financing, asset management and other programs by 2030. “Everybody knows there is a transition going on to a low carbon economy," Mr. MacIntyre. "We want to have a front row seat for that.”
He added “ArcTern was an easy one for us because they had an established track record, and, with OMERS and Equinor already there, those are both good clients of ours, so we were attracted to the team."
The cleantech investment firm was hatched at MaRS Discovery District by veteran entrepreneurs Tom Rand and Murray McCaig. Their first fund, launched in 2012, raised $60-million. For their second fund they originally targeted $150-million but have since raised that to $200-million, with an expected closing this fall, thanks to growing investor interest, Mr. Rand said. “We think they see something pretty dramatic happening in the economy and they want to be a part of that. We’re picking and choosing our dance partners at this point.”
ArcTern, which invests broadly in a range of cleantech subsectors including renewable energy, energy storage and agriculture technology is one of a handful of Canadian funds aiming to tap growing interest by investors in breakthrough technologies that could find commercial success in an era of heightened efforts to fight climate change. A report by BNP Paribas Asset Management this summer predicted the improving economics of renewable energy and the growth in use of electric vehicles “are set to become irresistible over the next decade” and could touch off “relentless and irreversible decline” in the economics of oil for gas and diesel vehicles.
“People think of cleantech as a subsidized, expensive thing but that is not the case any more,” Mr. Rand said. “What investors have begun to figure out is, that kind of dramatic shift is coming to Canada’s shores ... whether we like it or not and it’s driven by economics.”
Mr. Rand said all 10 of the Canadian-based companies backed by ArcTern’s first fund had attracted follow-on investment. The firm has made one investment and is finalizing another two through the second fund, representing a combined commitment by ArcTern of $18-million.
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Sean Silcoff