Canada’s Alberta province calls off partnership with Chinese private equity fund that sought to invest US$10 billion
- The Alberta Industrial Heartland and the Hong Kong-based private equity firm Can-China Global Resource Fund formed their partnership in 2016
- The only known investment by this fund was a US$545.4 million buyout of Calgary-based CQ Energy in 2017
The Alberta government has ended a partnership with a Chinese private equity fund that targeted US$10 billion to invest in the natural resources sector.
The Alberta Industrial Heartland, a not for profit organisation of the province of Alberta in Canada, and the Hong Kong-based private equity firm Can-China Global Resource Fund (CCGRF) had announced their partnership in 2016 to encourage investments across North America.
“This partnership no longer exists,” Karlee Conway, the communications director of the non-profit, said in an email response to Reuters. The spokeswoman did not respond to queries on why the partnership was called off and when.
The lead investor of the fund was China’s Export-Import Bank, Vancouver-based mining firm Hunter Dickinson and Swiss commodity trader Mercuria.
The previously unreported development comes as tension between China and Canada has escalated in recent years, though sources Reuters spoke to could not confirm whether the dissolution of the fund is a direct result of that.
Hong Kong-based MEC Advisory, which was tasked with managing the investments, CCGRF, Mercuria, Hunter Dickinson and Exim Bank did not respond to Reuters’ email request for comment.
“I cannot confirm this is directly related to bilateral relations, but it could indeed be a product of the increased tensions between the two countries,” said Lynette Ong, professor of political science at University of Toronto.
She added that provincial governments might feel forced to toe the official stance of Ottawa or not to veer too much from public opinion, as it could incur risks.
The only known investment by this fund was a C$722 million (US$545.4 million) buyout of Calgary-based CQ Energy in 2017, a private natural gas production services company. The status of this investment is unknown.
Diplomatic ties between Beijing and Ottawa started to worsen after Canada arrested Huawei Technologies CFO Meng Wanzhou in 2018 at the request of the United States. Following Meng’s arrest, China detained two Canadian citizens accusing them of spying.
While all three were released in 2021, the relationship between China and Canada has not returned to normal.
01:31
Hero’s welcome for Meng Wanzhou at Huawei offices in China after extradition battle and quarantine
The oil-rich province of Alberta exported C$4.5 billion worth of goods to China in 2020, making it the Canadian province’s second-biggest export market. Some of China’s large state oil companies expanded into Alberta before the collapse of oil prices in 2014.
A person aware of the fund told Reuters that the US$10 billion target was for marketing purposes and the first stage of the investment was no more than US$1 billion. A person added that Exim Bank started looking into the structure of the fund “after it suffered big losses” and they sent a representative from Beijing to divest on certain projects.
The CCGRF was set up in 2013 as part of a bilateral discussion between the governments of Canada and China to encourage investments of public and private capital into Canada’s natural resources sector.
The rift between the two countries widened since Meng’s arrest. Last year, Canada forced three Chinese state investors to sell out of Canadian critical mining companies, as it tries to wean off its dependency on China in its critical mining sector.
This month, Canada froze ties with the China-led Asian Infrastructure Investment Bank as it launched an investigation into allegations that the institution was dominated by the Chinese Communist Party.
