Mark Carney's government has a newfound interest in equity stakes in publicly listed companies.Christinne Muschi/The Canadian Press
Last year, Foran Mining, a four-year-old VSX-listed copper miner with a large site in Saskatchewan, closed a $350-million private placement with Fairfax Holdings, Agnico Eagle and, somewhat unexpectedly, the Government of Canada, via a newish investment vehicle called the Canada Growth Fund (CGF). With a $15-billion pool of capital, the CGF has a mandate to invest debt or equity in emission-reduction projects.
Both Saskatchewan and Ottawa had previously anted up $131 million in financing for Foran, but the feds hadn’t bought shares before. Now, the CGF—i.e., we—owns 10% of Foran’s float, with a book value of $156 million. (The company’s market cap as of mid-January was about $3.2 billion.) That deal is part of Prime Minister Mark Carney’s campaign to reprogram the Canadian economy by pouring money into critical minerals—some through familiar channels, like project funding or loans, but also in the form of equity stakes.
Carney’s Ottawa is not alone in its newfound interest in acquiring shares in publicly listed companies. The Trump administration reversed a long-standing U.S. practice by buying some hefty stakes in listed mining companies, as well as a whopping US$8.9-billion chunk of Intel, and an option to acquire 8% of nuclear giant Westinghouse. The buying spree includes US$35.6 million in the shares of a Canadian miner, Trilogy, which is of interest in Trumpland because of its ownership of mineral rights in Alaska.
Such deals revive an old question: Should governments wade into capital markets, thinking they know how to pick winners? “That could be a positive,” says Jing Li, Canada Research Chair in Global Investment Strategy at Simon Fraser University’s Beedie School of Business. “Having additional investment from government is, in general, a good thing for the company, as long as they don’t really interfere in daily operations.”
Other academics, however, hold to a view that traces back to 1980s neo-liberal orthodoxies about government keeping its big wet nose out of private enterprise. Of course, that was never actually a hard-and-fast rule. Governments still provided largesse in the form of tax credits, contracts, or bespoke industrial policies like the CHIPS and Science Act. But in North America, at least, pols stopped short of buying shares until the 2008 credit crisis, when the Obama administration acquired stakes in hobbled financial institutions and General Motors.
Not all regions have shared in our devotion to Milton Friedman’s church-and-state philosophy. Brazil’s national government has been a major, and at times distorting, presence in that country’s equity markets for decades. During this century, sovereign wealth funds have emerged as the world’s largest equity investors. In China, Beijing owns stakes in hundreds of listed companies, many in strategic sectors. Likewise, France has long owned stock in major industrial firms through its Government Shareholding Agency, founded in 2003. As of 2024, the agency’s €179.5-billion portfolio contained 10 listed companies, including Airbus and Renault.
Through its Government Shareholding Agency, France controls a €179.5-billion portfolio with shares in 10 listed companies, including Airbus.Benoit Tessier/Reuters
According to a 2025 OECD report on the ownership of the world’s 46,000 listed companies, governments controlled 10% of global market capitalization at the end of 2024. In a weird way, we’re watching the 1980s privatization movie running in reverse, except that these new government equity holdings raise different questions—less about flabby state-owned enterprises and more about corporate governance, crony capitalism and geopolitical meddling.
A few scholars do see a public policy upside. University of Massachusetts Amherst economist and lawyer Lenore Palladino argues that governments could become activist shareholders, persuading firms to incorporate social or environmental goals. “A public equity stake would function differently from a loan or grant in that it would enable the public to remain involved in [the company’s] key choice points,” she wrote in a 2024 white paper published by the Berggruen Institute, a California think tank.
However, in a poll of American economic experts conducted by the University of Chicago Booth School of Business last fall, 56% of respondents said U.S. government ownership of equity stakes in U.S. companies is “measurably detrimental” to performance, and 72% said it’s “substantially detrimental” to good governance.
Other researchers point to evidence suggesting the presence of government shareholders can bring unintended consequences. In a 2019 paper in the Journal of Corporate Finance, Kateryna Holland, an assistant professor at the University of New Mexico, examined the performance of firms with government equity investments made either directly by departments or at a remove, via sovereign funds or state-owned financial institutions.
“Prior literature has shown that government ownership has been bad for firms,” she says. Compared to other institutional investors, sovereign wealth funds tend to be passive investors. “They’re not monitoring, and they’re not active in the governance of the company. It’s actually been shown that even passive roles have negative influence on firm performance,” she adds.
Li, however, takes a pragmatic view. “Having the government take direct shares in business has both advantages and disadvantages,” she says. The shareholder relationship confers benefits like access to capital, customers, strategic information and even legitimacy. However, U.S. firms have traditionally tried to avoid having government acquire shares in their companies because it comes with lots of obligations. “The government may become board members. They may directly request firms to do certain things for national security reasons, maybe at the expense of the profitability of the company,” Li says. “That’s the balance they have to try to maintain.”
SFU’s Yifan Wei, an assistant professor of strategy at the Beedie School, adds that much depends on the investment’s desired outcomes. When governments invest in venture capital funds or early-stage tech firms, the results can be very effective, he says. But with more mature sectors, like critical minerals or rare-earths processing, Canadian- or U.S.-government shareholders may experience disappointing results because Chinese rivals, including those with state backing, enjoy stark advantages when it comes to lower environmental standards and labour costs.
Then there’s the finger-on-the-scale problem. Holland cites an abundance of research showing that governments tend to provide more corporate loans or buy shares in election years “to encourage the electorate to vote for the incumbent.”
In Brazil, according to a 2012 study by law professor Mariana Pargendler, the national government during a 1990s privatization campaign watered down shareholder protection laws to attract investment from well-connected families looking to buy state-owned equities. The result: a US$64.2-billion windfall for the Brazilian state in 1997 and 1998, a temporary exodus of small investors and a legacy of dodgy corporate governance regulation. It all served the government’s financial interests in 2010, when Brazil went public with Petrobras, a giant state-owned oil company that raised US$67 billion. The government stake has only grown since then, which, as Pargendler concluded, shows “that the state’s role as a shareholder, and its interest in an inefficiently weak corporate governance regime, are not going away in the near future.”
The Trump administration reversed a long-standing U.S. practice by buying some hefty stakes in listed companies, including US$8.9-billion in Intel.LOREN ELLIOTT/The New York Times
It’s not yet clear whether the U.S. and Canada are discarding those neo-liberal outlooks to pursue more aggressive plans to buy equities in strategically vital sectors, or if acquisitions in firms like Intel, Foran and Trilogy are mainly about sending signals. As well, U.S. equity markets are so vast that even a massive government stock-buying campaign will scarcely make a dent. We won’t do any better, needless to add.
Li says that governments getting into the shareholder business would be wise to measure success the old-fashioned way: “A good indicator for this will be to see how shareholders would react.” For the record, Intel’s shares went up after Washington bought in. After an initial dip following the CGF’s share purchase, so, too, did Foran’s.