# IN THE MATTER OF THE SECURITIES LEGISLATION OF ONTARIO
(the Jurisdiction)
AND
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IN THE MATTER OF THE PROCESS FOR EXEMPTIVE RELIEF APPLICATIONS IN MULTIPLE JURISDICTIONS
AND
# IN THE MATTER OF CANADA LIFE INVESTMENT MANAGEMENT LTD.
(the Filer)
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## DECISION
### I. BACKGROUND
The principal regulator in the Jurisdiction has received an application from the Filer, on behalf of Counsel Global Listed Private Equity Pool (the Initial Top Fund) and any additional existing and future investment funds managed by the Filer, or an affiliate of the Filer, that are subject to National Instrument 81-102 Investment Funds (NI 81-102) (the Additional Top Funds and together with the Initial Top Fund, the Top Funds and individually a Top Fund), for a decision under the securities legislation of the Jurisdiction of the principal regulator (the Legislation) for an exemption, pursuant to section 19.1 of NI 81-102, from:
(a) Paragraphs 2.5(2)(a) and 2.5(2)(a.1) of NI 81-102, to permit each Top Fund to purchase or hold securities of Northleaf Global Private Equity Fund (the Initial Underlying Northleaf Fund), Sagard Private Equity Strategies LP (the Initial Underlying Sagard Fund), and/or any other future investment fund that is, or will be, managed by Northleaf or Sagard (as defined herein), and that is not subject to NI 81-102 (the Future Underlying Northleaf Funds and the Future Underlying Sagard Funds, and together, the Future Underlying Funds). The Initial Underlying Northleaf Fund, the Initial Underlying Sagard Fund, and the Future Underlying Funds are collectively referred to as the Underlying Funds and individually an Underlying Fund;
(b) Paragraph 2.5(2)(b) of NI 81-102, to permit each Top Fund to purchase or hold securities of an Underlying Fund which in turn may hold more than 10% of its net asset value (NAV) in securities of one or more investment funds; and
(c) Paragraph 2.5(2)(c) of NI 81-102, to permit each Top Fund to purchase or hold securities of an Underlying Fund which will not be a reporting issuer in any jurisdiction (together, the Exemption Sought).
Under the Process for Exemptive Relief Applications in Multiple Jurisdictions (for a passport application):
(a) the Ontario Securities Commission is the principal regulator for this application; and
(b) the Filer has provided notice that paragraph 4.7(1) of Multilateral Instrument 11- 102 Passport System (MI 11-102) is intended to be relied upon in each of the other provinces and territories of Canada (together with Ontario, the Jurisdictions).
### II. INTERPRETATION
Terms defined in NI 81-102, National Instrument 14-101 Definitions and MI 11-102 have the same meaning if used in this decision, unless otherwise defined.
### III. REPRESENTATIONS
This decision is based on the following facts represented by the Filer:
#### The Filer
[1] The Filer is a corporation governed under the laws of Canada with its registered head office located in London, Ontario.
[2] The Filer is a subsidiary of the Canada Life Assurance Company, which is a wholly owned subsidiary of Great-West Lifeco Inc. (“Lifeco”).
[3] The Filer is registered as a portfolio manager in all Jurisdictions, as an investment fund manager in Ontario, Québec and Newfoundland and Labrador, and as a commodity trading manager in Ontario.
[4] The Filer, or an affiliate of the Filer, is or will be the investment fund manager of each Top Fund.
[5] The Filer, or an affiliate of the Filer, may act as portfolio manager of the Top Funds or may appoint one or more portfolio managers for the Top Funds or sub-advisers to provide the Filer, or an affiliate of the Filer, with investment advice in respect of a Top Fund’s investments.
[6] The Filer is not in default of securities legislation in any of the Jurisdictions.
#### The Top Funds
[7] The Top Funds are, or will be, investment funds to which NI 81-102 applies, subject to any exemptions therefrom that have been, or may be, granted by the applicable securities regulatory authorities. A Top Fund may be an “alternative mutual fund” as defined in NI 81-102.
[8] Securities of each Top Fund were, are or will be offered pursuant to a simplified prospectus prepared in accordance with National Instrument 81-101 Mutual Fund Prospectus Disclosure (NI 81-101) and Form 81-101F1 or a long form prospectus prepared in accordance with National Instrument 41-101 General Prospectus Requirements.
[9] The Top Funds are, or will be, reporting issuers in at least one of the Jurisdictions.
[10] No existing Top Fund is in default of securities legislation in any of the Jurisdictions.
[11] Consistent with their investment strategies, and within the limits of the illiquid asset restriction of section 2.4 of NI 81-102, each Top Fund may invest in private market assets. For this purpose, each Top Fund wishes to have the ability to purchase securities of the Underlying Funds, each of which may hold more than 10% of its NAV in securities of one or more investment funds (the Third Tier Funds).
[12] The prospectus of each Top Fund that distributes units by way of prospectus discloses, or will disclose, in its description of the Top Fund’s investment strategies that the Top Fund may invest up to 10% of its NAV directly or indirectly in a diversified portfolio of privately held companies. This limit is consistent with the classification of the Underlying Funds as illiquid assets for purposes of NI 81-102.
[13] Each Top Fund is, or will be, subject to National Instrument 81-107 Independent Review Committee for Investment Funds (NI 81-107) and the Filer has established an independent review committee (IRC) to review conflict of interest matters pertaining to the Top Funds as required by NI 81-107.
#### Northleaf
[14] Northleaf Capital Group Ltd., together with its affiliates including Northleaf Capital Partners (Canada) Ltd. (Northleaf), is a global private markets investment firm with more than US$31 billion in private equity, private credit and infrastructure commitments under management on behalf of more than 375 public, corporate and multi-employer pension plans, endowments, foundations, financial institutions and family offices. Northleaf is led by an experienced group of professionals, who collectively have significant experience in structuring, investing and managing global private markets investments and in evaluating, negotiating, structuring and executing complex financial transactions.
[15] On October 28, 2020, the Filer’s affiliate, Mackenzie Financial Corporation (Mackenzie), and the Filer’s indirect parent company, Lifeco, entered into a strategic partnership with Northleaf whereby Mackenzie and Lifeco jointly acquired a 49.9% non-controlling voting interest and 70% economic interest in Northleaf.
[16] The Initial Underlying Northleaf Fund and the Future Underlying Northleaf Funds are, or will be, managed by Northleaf Capital Partners (Canada) Ltd., which is registered as an exempt market dealer in Alberta, British Columbia, Manitoba, Newfoundland and Labrador, Ontario, Québec and Saskatchewan, as an investment fund manager in Manitoba, Ontario and Québec and as a portfolio manager in Alberta, Manitoba and Ontario.
#### Sagard
[17] Sagard Holdings Inc., together with its affiliates including Sagard Holdings Manager (Canada) Inc. (Sagard), is a multi-strategy alternative asset manager with professionals principally located in Canada, the U.S. and Europe. The operations of Sagard are comprised of asset management and investing activities. Sagard manages multi-billion dollars of assets under management, including unfunded commitments, primarily across four asset classes: private credit, healthcare royalties, venture capital and private equity.
[18] Sagard is a wholly owned subsidiary of the Power Corporation of Canada and an affiliate of the Filer.
[19] The Initial Underlying Sagard Fund and the Future Underlying Sagard Funds are, or will be, managed by Sagard Holdings Manager (Canada) Inc., which is registered as an exempt market dealer in Alberta, British Columbia, Manitoba, New Brunswick, Newfoundland and Labrador, Nova Scotia, Ontario, Prince Edward Island, Quebec, and Saskatchewan, as an investment fund manager in Ontario, Newfoundland and Labrador, and Quebec and as a portfolio manager in Quebec and Ontario.
#### The Underlying Funds
[20] The Initial Underlying Northleaf Fund is a non-redeemable investment fund that seeks to provide the Top Funds with superior long-term returns through access to the value creation and capital growth potential of the private mid-market while offering the possibility of reduced risk through portfolio diversification. The Initial Underlying Northleaf Fund will execute its investment strategy by capitalizing on Northleaf’s at-scale global private equity program, investing in a combination of primary investments, secondary investments and direct investments (each a Portfolio Investment and collectively the Portfolio Investments).
[21] The Initial Underlying Sagard Fund is a non-redeemable investment fund that seeks to provide the potential for long-term capital growth through investment in a broadly diversified portfolio of high-quality primary investments, secondary investments, and direct investments selected to meaningfully outperform both public and private equity benchmarks over a long-term horizon. The Initial Underlying Sagard Fund seeks to build a diversified portfolio of private equity investments with a focus on North American small and mid-market buyout and growth equity investments and may also opportunistically pursue exposure to larger transactions and venture capital opportunities that are secondary investments.
[22] The Underlying Funds invest, or may invest, in other private equity funds sponsored by, and direct investments in partnership with, third party fund managers with whom Northleaf or Sagard have an investment relationship.
[23] Each Underlying Fund is, or will be, an “investment fund” as defined under the Legislation.
[24] No Underlying Fund is, or will be, subject to NI 81-102 or be a reporting issuer in any of the Jurisdictions.
[25] Northleaf and Sagard are not in default of the securities legislation of any of the Jurisdictions.
[26] The Initial Underlying Northleaf Fund and the Initial Underlying Sagard Fund are not in default of the securities legislation of any of the Jurisdictions.
[27] The Initial Underlying Northleaf Fund is valued no less frequently than quarterly and its securities are redeemable upon prior written notice subject to a lock-up period and specified fund and investor-level limitations on redemptions. The Initial Underlying Sagard Fund is valued on a monthly basis and redemptions are accepted quarterly at quarter-end NAV, with 65 calendar days’ notice and are limited to 5% of the NAV per quarter. As such, the Top Funds will not be able to readily dispose of their interest in the Initial Underlying Northleaf Fund or the Initial Underlying Sagard Fund and any interest that the Top Funds hold in the Underlying Funds will be considered an "illiquid asset" under NI 81-102.
[28] Future Underlying Funds may be potentially subject to redemption limitations, such as lock-up periods, early redemption penalties and/or other restrictions on redemptions in a given period of time (each, a Redemption Limitation).
[29] As part of its investment objective and strategies, each Underlying Fund may invest in securities of Third Tier Funds. Each Third Tier Fund may be an "investment fund" as defined under the Legislation.
[30] Paragraph 2.5(2)(b) of NI 81-102 prohibits an investment fund from investing in another investment fund if, at the time of purchase, the other investment fund has more than 10% of its net assets invested in securities of other investment funds (the Multi-Tier Prohibition).
[31] Since an Underlying Fund's investment in securities of the Third Tier Funds may, from time to time, exceed 10% of the NAV of the Underlying Fund, the Multi-Tier Prohibition will prohibit a Top Fund from investing in an Underlying Fund.
[32] An investment by a Top Fund in an Underlying Fund would not qualify for the exemptions in paragraph 2.5(4) of NI 81-102 from the Multi-Tier Prohibition because the Underlying Funds do not issue index participation units and are not clone funds or money market funds.
[33] No Underlying Fund will sell short securities of a Third Tier Fund, excluding index participation units.
[34] The Third Tier Funds may be managed by Northleaf and/or Sagard, or their affiliates. It is expected that the Third Tier Funds will invest in and hold private assets, including primary, secondary and direct investments across several private asset classes, including private equity and private credit.
[35] At least 85% of the aggregate asset value of an Underlying Fund’s investments will comprise (i) underlying third party private funds that are valued by a firm that is independent of the Filer and Northleaf or Sagard, as applicable, (ii) underlying related party private funds supported by independent valuation, (iii) direct investments in private assets valued by a firm that is independent of the Filer and Northleaf or Sagard, as applicable, and (iv) liquid investments, including exchange-traded funds and cash instruments.
[36] On an annual basis, the financial statements of an Underlying Fund will be audited by its respective external auditors. As part of these audits, the external auditors independently assess the fair value of investments in each Underlying Fund and evaluate the controls and processes in place to ensure each Underlying Fund’s Portfolio Investments are accurately valued in accordance with Northleaf’s and Sagard’s respective valuation policies.
[37] Northleaf's and Sagard’s respective private equity valuation policies, as applied to the Underlying Funds, are consistent with the International Private Equity and Venture Capital Valuation Guidelines.
#### Investments by Top Funds in the Underlying Funds
[38] An investment by a Top Fund in an Underlying Fund will only be made if the investment is, or will be, compatible with the investment objectives of the Top Fund.
[39] An investment by a Top Fund in an Underlying Fund will only be made if such investment represents the business judgment of a responsible person uninfluenced by considerations other than the best interests of that Top Fund.
[40] The investments in the Underlying Funds will be included as part of the calculation for the purposes of the illiquid asset restriction in section 2.4 of NI 81-102 for each Top Fund.
[41] The Filer believes that a meaningful allocation to private equity investments provides the Top Funds’ investors with unique diversification opportunities and represents an appropriate investment tool for the Top Funds that has not been widely available in the past. Private equity investments have historically performed well in down markets; the Filer believes that permitting the Top Funds to invest in private equity offers the potential to improve the Top Funds’ risk-adjusted returns and reduce volatility.
[42] An investment in the Initial Underlying Northleaf Fund or Initial Underlying Sagard Fund by a Top Fund is an efficient and cost-effective way for the Top Funds to implement a private equity investment strategy. The Filer believes it is in the best interests of the Top Funds to make use of Northleaf’s and Sagard’s experience and expertise as private equity investors to achieve a Top Fund’s desired exposure to a diversified portfolio of private companies. Without established relationships and internal private equity expertise, which Northleaf and Sagard possess but the Filer does not, it is extremely difficult to invest with leading global private equity sponsors. A Top Fund’s investment in an Underlying Fund will provide access to high-quality private equity opportunities that would not otherwise be attainable.
[43] Northleaf and Sagard provide an active and purposeful approach to private equity portfolio construction, risk management and diversification that the Filer does not have the expertise to replicate. Northleaf and Sagard engage in extensive due diligence of each investment opportunity to ensure that the investment meets the expected risk/return profile for the fund participating in the investment. In summary, investing in the Underlying Funds will provide the Top Funds with access to investments in hard to access private equity funds and assets that the Top Funds would not otherwise have exposure to constructed by Northleaf’s and Sagard’s experienced private equity professionals.
[44] Investments by a Top Fund in an Underlying Fund will be effected at an objective price, which for this purpose will be: a) in respect of an Underlying Fund that is open-ended, the NAV per security of the applicable class or series of the Underlying Fund; and b) in respect of an Underlying Fund that is closed-ended, a fixed price at the time of investment or acquisition.
[45] A Top Fund will not invest in an Underlying Fund unless the portfolio manager of the Top Fund believes that the liquidity of the Top Fund's portfolio is adequately managed through other strategies.
[46] The Filer does not anticipate that any sales fees or redemption fees would be incurred, directly or indirectly, by a Top Fund with respect to an investment in an Underlying Fund and between the Underlying Fund and the Third Tier Funds if such Third Tier Funds are managed by Northleaf and/or Sagard that, to a reasonable person, would duplicate a fee payable by the Top Fund or its investors to the Filer, unless the Top Fund redeems its securities of the Underlying Fund during a Redemption Limitation, in which case a fee may be payable by the Top Fund.
[47] In respect of an investment by a Top Fund in an Underlying Fund and in respect of an investment by an Underlying Fund in a Third Tier Fund, no management fees or incentive fees will be payable by a Top Fund or an Underlying Fund, respectively, that, to a reasonable person, would duplicate a fee payable by an Underlying Fund or a Third Tier Fund, respectively, for the same service.
#### General
[48] Absent the Exemption Sought, a Top Fund would be prohibited by paragraphs 2.5(2)(a) (or 2.5(2)(a.1)), 2.5(2)(b) and 2.5(2)(c) of NI 81-102 from purchasing or holding securities of an Underlying Fund because the Underlying Funds (i) are not subject to NI 81-102; (ii) may hold more than 10% of their respective NAV in securities of other investment funds; and (iii) are not a reporting issuer in any Jurisdiction.
[49] The Filer considers that investments in securities of Underlying Funds by the Top Funds raise "conflict of interest matters" within the meaning of NI 81-107 and therefore if the Exemption Sought is granted, the Filer will request approvals of the IRC for the proposed investments of the Top Funds in the Underlying Funds including by way of standing instructions. No such investments will be made until the IRC provides its approvals under section 5.2 of NI 81-107.
[50] Aside from the sections covered by the Exemption Sought, the Top Funds will otherwise comply with section 2.5 of NI 81-102 with respect to any investment in an Underlying Fund.
[51] Investments in the Underlying Funds are considered illiquid investments under NI 81-102 and therefore are not permitted to exceed 10% of the NAV of a Top Fund.
[52] As with any other illiquid investment, the portfolio managers of a Top Fund will carefully monitor the portfolio holdings and the liquidity needs of the Top Fund. Further, while the Top Funds may invest up to 10% in illiquid assets in accordance with NI 81-102, the Filer intends to keep the percentage of a Top Fund that is invested in illiquid assets at a moderately lower percentage to allow for fluctuations in the size of the Top Fund in order to manage compliance with the 10% restriction.
[53] Given the readily available liquidity of the remainder of a Top Fund’s investment portfolio, the Filer believes that the risk of the Top Fund needing to liquidate its investments in an Underlying Fund when markets are under stress or in other environments where liquidity may be reduced is remote.
[54] The prospectus of the Top Funds will disclose in the next regularly scheduled renewal, or amendment if earlier, the fact that the Top Funds invest in securities of the Underlying Funds and that each Underlying Fund may invest more than 10% of its NAV, on an aggregate basis, in securities of other investment funds, including Third Tier Funds.
### IV. 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 Exemption Sought is granted, provided that:
1. no Top Fund is actively participating or will actively participate in the business, management or operations of an Underlying Fund;
2. each Top Fund is treated as if it were an arm’s length investor in an Underlying Fund, with each investment by a Top Fund in a class or series of securities of an Underlying Fund made at a price and other terms no less favourable for the Top Fund as for all arm’s length investors in the same class or series of securities of that Underlying Fund;
3. the investment by a Top Fund in securities of an Underlying Fund is compatible with the investment objectives and strategies of the Top Fund and included as part of the calculation for the purposes of the illiquid asset restriction in section 2.4 of NI 81-102;
4. the IRC of a Top Fund will review and provide its approval, including by way of standing instructions, prior to the purchase of securities of an Underlying Fund, directly or indirectly, by the Top Fund, in accordance with subsection 5.2(2) of NI 81-107;
5. the Filer will comply with section 5.1 of NI 81-107, and the Filer and the IRC of the Top Fund will comply with section 5.4 of NI 81-107 for any standing instructions the IRC provides in connection with an investment by a Top Fund in an Underlying Fund;
6. a Top Fund will invest in securities of each Underlying Fund at an objective price, which for this purpose will be: a) in respect of an Underlying Fund that is open-ended, the NAV per security of the applicable class or series of the Underlying Fund; and b) in respect of an Underlying Fund that is closed-ended, a fixed price at the time of investment or acquisition;
7. at least 85% of the aggregate asset value of an Underlying Fund’s investments will comprise (i) underlying third party private funds that are valued by a firm that is independent of the Filer and Northleaf or Sagard, as applicable, (ii) underlying related party private funds supported by independent valuation, (iii) direct investments in private assets valued by a firm that is independent of the Filer and Northleaf or Sagard, as applicable, and (iv) liquid investments, including exchange-traded funds and cash instruments;
8. the prospectus of a Top Fund relying on this decision discloses, or will disclose, in the next renewal or amendment thereto following the date of this decision, the fact that the Top Fund may invest a portion of its assets in securities of the Underlying Funds, and that each Underlying Fund may invest more than 10% of its NAV, on an aggregate basis, in securities of other investment funds, including Third Tier Funds;
9. the Top Fund's investment in securities of each Underlying Fund and each Underlying Fund's investment in each Third Tier Fund is otherwise made in compliance with all other requirements of section 2.5 of NI 81-102 (except to the extent that discretionary relief has been granted from any such requirement), including, for greater certainty that:
(a) no management fees or incentive fees will be payable by a Top Fund or an Underlying Fund, respectively, that, to a reasonable person, would duplicate a fee payable by an Underlying Fund or a Third Tier Fund, respectively, for the same service;
(b) no sales fees or redemption fees will be payable by a Top Fund or an Underlying Fund, respectively, in relation to its purchases or redemptions of the securities of an Underlying Fund or a Third Tier Fund that is managed by Northleaf and/or Sagard, unless the Top Fund redeems its securities of the Underlying Fund during a Redemption Limitation, in which case a fee may be payable by the Top Fund; and
(c) the Filer will not cause the securities of an Underlying Fund held by a Top Fund to be voted at any meeting of the holders of such securities, except that the Filer may arrange for the securities the Top Fund holds of an Underlying Fund to be voted by the beneficial owners of the securities of the Top Fund who are not the Filer or an officer, director or substantial securityholder of the Filer.
10. where applicable, a Top Fund's investment in an Underlying Fund is or will be disclosed to investors in the Top Fund's quarterly portfolio holding reports, financial statements and/or fund facts documents.
“Darren McKall”
Darren McKall
AVP, Investment Management
Ontario Securities Commission
Application No. 2026-127; SEDAR+ #6411643
minicounsel