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Northern Genesis’s dreams of raising $200-million for its fourth blank-cheque fund in little more than a year have been dashed, at least for now, after investors balked at the deal structure, according to sources familiar with the transaction.

Northern Genesis is a holding company created by Ian Robertson and Chris Jarratt, who previously co-founded Algonquin Power & Utilities Corp. Together, the two men have launched three special-purpose acquisition companies, or SPACs, since August, 2020, raising a total of US$884-million.

SPACs raise money from public investors, then use the funds to go hunting for acquisition targets – hence why they are known as blank-cheque companies. Two Northern Genesis SPACs have already announced acquisitions – the first for electric-vehicle maker Lion Electric Co., and the second for autonomous trucking company Embark Trucks Inc. Their third SPAC is still looking for an acquisition target.

Building off their early success, Mr. Robertson and Mr. Jarratt launched a fourth fund IPO in mid-October, hoping to raise $200-million for Northern Genesis Climate Solutions Corp. and list it on the Toronto Stock Exchange. The fund was designed to invest in businesses focused on the transition to a sustainable energy future, and potential deals could be in sectors such as renewable electricity and transportation electrification.

This time, however, they pushed the limits of the SPAC structure and investors pushed back, prompting them to postpone the offering, according to two sources. The Globe and Mail is not identifying the sources because they are not authorized to speak publicly about the transaction.

Typically, SPAC investors are given the opportunity to vote on a proposed acquisition. Northern Genesis’s first SPAC had its deal for Lion Electric approved by shareholders in April, and its second SPAC is seeking approval for the Embark purchase.

The Climate Solutions fund, however, did not offer shareholders the right to vote on a proposed investment. Instead, any deal would only have to be approved by a majority of the company’s investment committee. The fund, then, is a true blind pool for investors.

To offset some of this investor risk, the fund’s management team offered to hold some of their shares for five years after the IPO closed.

The same structure was used by Stack Capital Group Inc. for its $100-million IPO in June. Stack raised the money to invest in private businesses, aiming to give public investors some exposure to private assets, but its stock has suffered of late. The IPO sold units comprised of a share and half of a warrant priced at $12 a piece, and the shares are now trading for $9.30 each.

In an e-mail, Northern Genesis did not directly address the deal’s structure, but Mr. Robertson wrote that, “On the advice of underwriters, we have decided to pause the process to ensure that the [fund] offering debuts into strong and supportive market conditions (which are challenging right now).”

He added that macro factors such as growing climate awareness, through events such as this week’s COP26 conference in Scotland, “maintain our confidence in the secular support” for the fund’s focus sectors.

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