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Canaccord, Chinese bank unveil $1-billion fund to invest in Canadian resources

Canada's Prime Minister Stephen Harper looks on as Chinese Premier Wen Jiabao gestures (R) after a signing ceremony at the Great Hall of the People in Beijing Feb. 8, 2012.

Diego Azubel/Reuters/Diego Azubel/Reuters

One of Canada's biggest investment banks is teaming with a Chinese bank to create a $1-billion (U.S.) fund to invest in Canadian resources companies, an initiative unveiled as part of Prime Minister Stephen Harper's visit to China.

Canaccord Financial Inc. and Import Export Bank of China will create what they call the "Canada-China Natural Resource Fund." Senior executives from the companies were scheduled signed a memorandum of understanding on the plan with Mr. Harper and Chinese Vice-Premier Li Keqiang present.

Mr. Harper's trip to China has in large part been focused on closer ties between the two countries economically, and he has used some of his time to urge officials there to allow Canadian companies to invest in China.

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Going the other way, Chinese capital has been flooding into Canada's resource sector, especially in energy. State-owned enterprises have invested in Canada's oil sands, and looked at huge deals in mining.

That flow of money may only increase with this fund. Canaccord and the Chinese bank, known as Eximbank, expect to raise a good chunk of the $1-billion from large Chinese investors. The fund's objectives also include sustainable development and "substantial returns on investment," according to Canaccord. It will be set up at arm's length from its owners, and will be run by independent managers hired by the fund's backers, the firm said.

"The 'Canada-China Natural Resource Fund' demonstrates the importance of Canadian financial markets in the development of resource companies and the continued expansion of Chinese participation in natural resource projects around the world," Canaccord chief executive officer Paul Reynolds said in a statement.

Canaccord has focused on expansion in China, buying an advisory firm in the country and partnering with Eximbank to drum up business.

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