Northleaf Capital Partners (Canada) Ltd.
Headnote
National Policy 11-203 Process for Exemptive Relief Applications in Multiple Jurisdictions -- Relief from subsection 13.5(2)(b) of National Instrument 31-103 Registration Requirements, Exemptions and Ongoing Registrant Obligations to permit a one-time interest transfers between private funds under common management, subject to conditions.
Applicable Legislative Provisions
National Instrument 31-103 Registration Requirements, Exemptions and Ongoing Registrant Obligations, ss. 13.5 and 15.1.
August 28, 2025
IN THE MATTER OF THE SECURITIES LEGISLATION OF ONTARIO (the Jurisdiction) AND IN THE MATTER OF NORTHLEAF CAPITAL PARTNERS (CANADA) LTD. (the Filer)
DECISION
Background
The securities regulatory authority in the Jurisdiction (the Principal Regulator) has received an application from the Filer for a decision under the securities legislation of the Jurisdiction (the Legislation) for an exemption from the prohibitions in subsection 13.5(2)(b) of National Instrument 31-103 Registration Requirements, Exemptions and Ongoing Registrant Obligations (NI 31-103) which prohibit a registered adviser from knowingly causing an investment portfolio managed by it, including an investment fund for which it acts as an adviser, to purchase or sell a security from or to the investment portfolio of an investment fund for which a responsible person acts as an adviser, in order to permit the Existing Fund (as defined below) to sell securities to:
(a) the New Fund (as defined below), which will also be managed by the Filer; and
(b) the Purchaser Funds (as defined below), each of which may be managed by the Filer
(the Relief Sought).
Interpretation
Terms defined in National Instrument 14-101 Definitions and NI 31-103 have the same meaning if used in this decision, unless otherwise defined. The following terms have the following meanings:
Clients means the sole investors in the Existing Fund, being pension plans maintained for the benefit of employees of a Canadian financial institution that are managed by that financial institution;
Existing Fund means the limited partnership in which the Clients are the sole limited partner and the Filer is the general partner, which is managed by the Filer;
NAV Record Date means the record date for the valuation attributable to the Third-Party Fund Interests by the managers of the respective funds, which has been agreed by the Clients and the Filer to be September 30, 2024;
New Fund means the fund to be formed to purchase Third-Party Fund Interests from the Existing Fund, the investors in which will be exclusively sophisticated institutional investors that qualify as accredited investors pursuant to National Instrument 45-106 Prospectus Exemptions and section 73.3 of the Securities Act (Ontario) (Accredited Investors);
New Purchasers means sophisticated institutional investors that qualify as Accredited Investors identified by an independent dealer engaged by the Filer to acquire Third-Party Fund Interests, who may hold those interests directly or through one or more Purchaser Funds;
Purchaser Funds means one or more funds that may be established by the Filer at the request of the New Purchasers to facilitate the acquisition, holding and administration of the Third-Party Fund Interests acquired by the New Purchasers (and together with the Existing Fund and the New Fund, the Funds); and
Third-Party Fund Interests means a portion of the portfolio investments of the Existing Fund, consisting of private equity vehicles, commonly considered to be traditional buy-out type private equity funds, that are sponsored and managed by entities that are not affiliated with the Filer. These vehicles are not considered "investment funds" within the meaning of the Securities Act (Ontario), nor within the scope contemplated by the commentary in Companion Policy 31-103CP Registration Requirements, Exemptions and Ongoing Registrant Obligations.
Representations
This decision is based on the following facts represented by the Filer:
1. The Filer is a corporation existing under the laws of Ontario with its head office in Toronto, Ontario.
2. The Filer is a global private markets investment firm with more than US$28 billion in private equity, private credit and infrastructure commitments raised on behalf of more than 300 public, corporate and multi-employer pension plans, endowments, foundations, financial institutions and family offices.
3. The Filer is registered as: (i) an investment fund manager in Ontario, Manitoba, and Quebec, (ii) a portfolio manager in Ontario, Manitoba, and Alberta, and (iii) an exempt market dealer in Ontario, Quebec, Saskatchewan, Newfoundland and Labrador, Manitoba, British Columbia, and Alberta.
4. The Filer is, or will be, the portfolio manager and investment fund manager of the Existing Fund and the New Fund and may be the portfolio manager and investment fund manager of one or more Purchaser Funds.
5. Each of the Funds is or will be formed as a limited partnership or other legal entity and is not or will not be a reporting issuer in any of the provinces and territories of Canada.
6. The securities of the Existing Fund were distributed to the Clients on a private placement basis pursuant to available prospectus exemptions.
7. None of the Existing Fund, the New Fund or the Purchaser Funds is or will be subject to National Instrument 81-102 Investment Funds.
8. The Existing Fund holds a portfolio of private equity investments including the Third-Party Fund Interests and minority investments in private companies alongside other private equity funds (each a Co-Investment).
9. The trades from Existing Fund to the New Fund or a Purchaser Fund (the Inter-Fund Trades) will only include Third-Party Fund Interests; no Co-Investments will be sold as part of the Inter-Fund Trades.
10. The Filer and the Funds are not in default of securities legislation in any of the provinces and territories of Canada.
11. Each of the New Fund and the Purchaser Funds will be established primarily for the purposes of acquiring the Third-Party Fund Interests, and investors in the New Fund and the Purchaser Funds will make their investment decision with knowledge of the proposed investments and the background to the Inter-Fund Trades.
12. Investors in the New Fund and the Purchaser Funds (other than a fund's general partner or any other affiliates, employees or related persons thereof investing directly or indirectly in such fund, if any) will exclusively be sophisticated institutional investors capable of assessing the proposed investment in the Third-Party Fund Interests and the fairness of the valuations of the Third-Party Fund Interests provided by their respective managers.
13. The pricing of the Inter-Fund Trades of the Third-Party Fund Interests will be established with reference to the net asset value attributable to the Third-Party Fund Interests as of the NAV Record Date (with an adjustment for post-NAV Record Date cash flows), as determined by the managers of the respective funds, which managers are not affiliated with the Filer.
Decision
The Principal Regulator is satisfied that the decision meets the test set out in the Legislation for the Principal Regulator to make the decision.
The decision of the Principal Regulator under the Legislation is that the Relief Sought is granted provided that:
1. The Filer obtains the prior written consent of the Clients of the Existing Fund before it engages in the Inter-Fund Trades in connection with the sale of Third-Party Fund Interests held by the Existing Fund and such consent has not been revoked;
2. The New Fund and the Purchaser Funds would, at the time of payment, be permitted to purchase the Third-Party Fund Interests held by the Existing Fund;
3. The purchase of the Third-Party Fund Interests is consistent with the New Fund's and the Purchaser Funds' investment objectives;
4. All investors in the New Fund and the Purchaser Funds are sophisticated institutional investors that qualify as accredited investors under National Instrument 45-106 Prospectus Exemptions and section 73.3 of the Securities Act (Ontario);
5. The consideration paid to the Existing Fund for the Third-Party Fund Interests by the New Fund and the Purchaser Funds is established with reference to the net asset value attributable to the Third-Party Fund Interests as of the NAV Record Date (with an adjustment for post-NAV Record Date cash flows);
6. The valuation of the Third-Party Fund Interests is determined by the unaffiliated managers of the respective funds, which managers are not affiliated with the Filer, in accordance with applicable fund governing documents and using recognized accounting standards, and is supported by (i) quarterly and annual reporting received by the Filer from such managers, and (ii) a review of those valuations as part of the Filer's year-end financial audit, conducted by an independent audit firm;
7. The Filer provides disclosure to the Clients and each investor in the New Fund and the Purchaser Funds setting out the details of the Third-Party Fund Interests and the valuations provided by their respective managers; and
8. The Filer does not receive any consideration for the sale or purchase of the Third-Party Fund Interests, with the only incremental amounts payable by the Existing Fund, the New Fund or the Purchaser Funds being any applicable transfer taxes or administrative fees or charges payable to the respective third-party managers or their legal counsel in connection with the transfers of the Third-Party Fund Interests.
"Darren McKall"
Associate Vice President, Investment Management Division
Ontario Securities Commission
Application File #: 2025/0451