Good morning!
The Canadian government is taking an equity interest in the national interest - itās investing Cohere to keep a homegrown AI contender anchored in Canada.
While Canada adds to its portfolio, BMO and EQB are trimming theirs through asset sales.
Letās get into it.
MARKET RUNDOWN
Yesterdayās Close
Alphabetās disappointing search revenue and worsening AI cash burn reignited concerns about Big Techās AI-related spending, dragging the Nasdaq down (1.4%).
Accelerating U.S. inflation reinforced expectations of a Fed rate hike in December and weighed on gold.
Financials helped keep the TSX nearly flat despite losses in technology and miners.
BRIEF OF THE DAY
Government of Canada Invests Up to $1.6B in AI Developer Cohere
The news: The federal government committed up to $1.6B for an equity stake in Toronto-based Cohere, which develops AI models and software for businesses and governments. The investment forms part of a planned $7B Series E funding round led by Germanyās Schwarz Group, with NVIDIA, Bell Ventures, and Inovia Capital among the other backers.
The financing: Cohere has completed an initial close and says it has secured most of the targeted funding. At its full size, the $7B round would be Canadaās largest-ever private technology financing and value Cohere at ~$35.7B post-money (up from ~$9.7B at its last round in September 2025). Proceeds will fund AI models, computing infrastructure, and international expansion.
Cohereās flagship product: Its āNorthā platform helps employees search company information, analyze documents, and automate tasks. Customers can run it within their own computing systems, retaining greater control over sensitive data. That control is central to Cohereās āsovereign AIā pitch, particularly for banks, governments, and other regulated organizations. Cohereās customers include RBC, Oracle, and Bell.
The sovereignty push: The announcement came alongside Canadaās new national security strategy and the Canada-EU summit. As the trade war strains Canadaās relationship with the U.S., the Canadian government wants a homegrown alternative to U.S. and Chinese AI suppliers. With Canada seeking closer European partnerships, Cohereās planned combination with German AI developer Aleph Alpha and partnership with Schwarz Groupās European cloud business would expand its access to European customers and computing infrastructure.
Canadaās conditions: With the investment, Cohere has committed to remain headquartered and incorporated in Canada. It has also committed to create at least 1,000 new Canadian technical jobs and invest at least $1.7B in additional computing infrastructure in Canada, both by 2030. The government will invest in stages, with Cohere required to report regularly on its progress toward those commitments.
Governments as shareholders: The Cohere deal marks the Canadian governmentās largest single equity commitment to a tech company. AI Minister Evan Solomon has signalled more to come: the separate, planned $500M āCanadian Tech Growth Fundā will also be able to ātake equity positions.ā The U.S. government has already pursued this approach: last year, it agreed to acquire a 9.9% stake in chipmaker Intel and buy preferred shares in rare earths producer MP Materials.
š¼ Why this matters: Canadaās sovereignty push is becoming an investment strategy aimed at reducing foreign dependence in critical areas like AI, semiconductors, cloud infrastructure, and satellite communications.
Canada is not only buying into Cohereās growth, but also securing commitments to keep a strategically important AI company anchored in Canada.
Cohere gains capital and a government endorsement that could help it win customers at home and abroad.
Canadian taxpayers share in the potential gains, but also take on the commercial risk of backing a single company.
The next question is which other strategically important companies Canada will back - and what it will require in return.
HEADLINE RECAP
In Canada
Trump says Canada has been treating the U.S. āextremely nicely recentlyā (RTRS)
Canadian corporate law firms McCarthy TĆ©trault and Davies hit by data breaches (GM)
Competition Bureau calls on provinces and territories to introduce legislation restricting non-compete agreements (GM)
Faster rollout of generic and biosimilar drugs could save Canada $94B by 2035 (GM)
Canada quietly abandoned work on promised 2030 thermal coal export ban, auditor general finds (GM)
Gold miner Agnico Eagle (TSX:AEM) warns rising diesel prices could add up to US$80/oz to 2027 gold production costs (BBG)
WestJet says soaring jet fuel costs have delayed IPO plans as Air Canada (TSX:AC) cuts earnings forecast (GM)
Calgary oil producer Whitecap Resources (TSX:WCP) expects $400M boost to 2027 cash flow from proposed federal tax break (BBG)
Ottawa-based satellite operator Telesat (TSX:TSAT) weighs alternatives ahead of US$1.7B December debt maturity (GM)
Allied Properties REIT (TSX:AP.UN) cuts distribution by 90% to focus on debt repayment (GM)
Canadian telecom selloff draws bargain-hunting fund managers as sector falls 17% in 2026 (BBG)
Rogers hit with $15M fine over ādeceptiveā marketing of its āInfiniteā phone plan (CBC)
Canadian National Railway (TSX:CNR) names Jamie Lockwood next CFO as Ghislain Houle plans retirement (RTRS)
DEALS WITH CANADIAN PARTIES
M&A & Investments
BMO (TSX:BMO) closed the initial stage of its transportation & vendor finance sale to alternative investment manager Stonepeakās Longview Capital Solutions, transferring ~$11B of loans and leases while retaining 19.9% of the business; ~25% of the portfolio remains to be transferred.
BMO and Bank of America advised BMO; Bank of America was lead financing arranger for the acquisition.Ā
EQB (TSX:EQB): The Toronto-based bank agreed to sell Bennington Financial, its equipment leasing & financing subsidiary with ~$1.1B in lease receivables, to Desjardins at an ~8% discount to receivables. The sale will allow EQB to refocus on core banking operations following its acquisition of PC Financial.
National Bank advised EQB; Desjardins advised Desjardins.
Obsidian Engineering: The Calgary-based energy engineering firm agreed to be acquired by MontrĆ©al-based engineering & environmental services firm Englobe, which is controlled by Colliers; Obsidianās senior team will become significant shareholders in Englobe.
Boralex: The MontrƩal-based renewable power producer backed by Brookfield and La Caisse acquired U.K. wind developer Wind2, adding its team and ~350 MW of advanced projects.
Knight Frank Capital Advisory advised Wind2.
Recurrent Energy, a San Francisco-based subsidiary of Canadian Solar (NASDAQ:CSIQ), sold two French battery projects in development (totalling 200 MW/800 MWh) to BW ESS; Recurrent will continue developing the projects until theyāre ready for construction.
Coveo (TSX:CVO): The MontrƩal-based AI search company acquired San Francisco-based product data enrichment company Anglera for US$7.2M (~$10.1M), net of cash and debt, plus a performance-based cash earnout.
Dreeven: The QuĆ©bec-based construction project management software company was acquired by Vancouver-based software group JDM Technology Group, adding to JDMās Canadian software portfolio which includes Maestro Technologies and Mobile-Punch.
TUK Group: The Ontario rental developer agreed to acquire a Bayview Avenue site in Toronto for a proposed ~30-unit purpose-built rental building.
BlueFlare: The Calgary-based power & data centre developer signed non-binding terms to combine with FingerMotion (NASDAQ:FNGR); upon the mergerās completion, BlueFlare shareholders and certain management & advisory recipients would hold ~80% of the combined company, which would trade on the Nasdaq under the new ticker symbol BFLR.
VC & Growth Equity
Cohere: The Toronto-based enterprise AI developer completed an initial close of its Schwarz Group-led Series E funding round targeting up to $7B at a ~$35.7B post-money valuation. The Government of Canada committed up to $1.6B in stages, with additional participation from NVIDIA, Bell Ventures, Inovia Capital, Bullhound Capital, and Prosperity7 Ventures; proceeds will support AI development and computing infrastructure.
Solink: The Ottawa-based AI video-analytics platform raised US$100M+ (~$140M+) in a mostly primary round led by Vertu Capital, with participation from Goldman Sachs Growth Equity, Golub Growth, and Comcast Ventures.
Bot Food: The Toronto-based developer of personal-data management software for AI assistants raised $1.5M in pre-seed funding from GreenSky Ventures to build an encrypted library that lets users control what information they share across AI applications.
ECM
Methanex (TSX:MX): The Vancouver-based methanol producer approved a share buyback program for up to 3.9M shares (~5% of outstanding) through November 2027, citing strong cash flow and progress on debt reduction.
DCM & Credit
Government of Canada sold an additional $5B of its existing 3.50% bonds due 2036, bringing total outstanding to $25B; the auction attracted ~$12.6B in bids.
City of Longueuil: The QuƩbec municipality announced a ~$40M bond offering across six tranches due 2027-36, with coupons ranging from 3.15% to 4.65%.
National Bank was sole manager.
NuRAN Wireless (NASDAQ:NUR): The QuƩbec-based telecom infrastructure operator secured a US$10M non-convertible revolving credit facility to fund working capital and new telecom towers in Africa; the financing provides a non-dilutive alternative to its existing ATM program.
Critical One Energy (CSE:CRTL): The Toronto-based antimony explorer signed a binding MOU with Solar International Core Canada outlining a potential $400M construction debt facility for its Howells Lake project in Ontario, alongside $25M in proposed strategic capital.
RBC (TSX:RBC) announced a US$2B offering of senior unsecured fixed-to-floating notes, comprising US$1B of 5.423% notes due 2030 and US$1B of 5.633% notes due 2032; both switch to floating rates one year before maturity.
Goldman Sachs, NatWest, RBC, Santander, Truist, and U.S. Bancorp were joint bookrunners.
Scotiabank (TSX:BNS) announced a $2.25B offering of 4.448% senior unsecured bail-in notes due 2032, switching to a floating rate in 2031.
Scotiabank was sole manager.
GM Financial Canada: The Toronto-based auto lender announced $600M of 4.70% senior unsecured notes due 2031.
BMO, CIBC, RBC, Scotiabank, and TD were joint bookrunners.
BAY STREET TRIVIA
Which former Crown corporation completed the largest IPO in Canadian history at the time in 1995?
FOR THE GROUP CHAT
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