Quebec’s largest pension manager embarks on a new global expansion

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MONTREAL – Quebec’s largest pension fund manager, the Caisse de depot, plans to increase its global presence for the first time in about 15 years as it seeks to accelerate global investments and compete with large Canadian institutional rivals.

“Frankly we have some catching up to do,” CEO Michael Sabia said Monday, pointing to global efforts by investors such as the Canada Pension Plan Investment Board.

The Caisse plans to open several new offices outside Canada that will help identify winning investment opportunities and potential partners.

After addressing the issues of 2007 and 2008 that led to disastrous losses, repositioning itself and hiring key outside experts, he said the Caisse is now ready to rebuild its global presence.

The Caisse will expand its presence in North America with offices in Washington, D.C., and Mexico City.

They will be in addition to existing offices in Montreal and New York City.

In the Asia-Pacific region, the Caisse currently has an office in Beijing and will add a regional office in Singapore and eventually in Mumbai and Sydney.

About 44 per cent of the Caisse’s investment portfolio is outside Canada, largely in the United States and Europe.

Sabia said he won’t be scared off from failed efforts that were pulled back in the late 1990s, when the Caisse had opened a dozen foreign offices, including ones in Tokyo, Warsaw, Budapest, Seoul and Morocco.

“Given the big fundamental changes in the world, we have to increase our presence outside Montreal. That’s just a fact,” he said.

“Our peers are present in many markets and for them in a world where the competition among institutional investors is ferocious we need to be present to have access to the best partners, to the best transactions.”

That doesn’t mean just investing in riskier emerging markets. He said the Caisse wants to boost its presence in the United States and Australia along with India and countries in southeast Asia that are sometimes viewed as higher risk. That may mean reducing its presence in Europe and Canada.

He said the Caisse will only invest with local partners who understand the terrain, as much as it understands Canada, especially Quebec. About 50 or 60 people could be hired and the foray could cost up to $45 million, offset by $25 million in recent cost-cutting efforts.

Sabia told the business audience that the Caisse wants to be among the first called about a good business opportunity, but must be on the ground to hear about options.

“It is our responsibility to go out and seek returns where they are and serve as a bridge to the world for Quebec’s economy,” he told the business audience.

“This will be one of the cornerstones of everything we do over the next five years.”

Sabia said the push to become a more global organization won’t reduce its support in Quebec.

He said the province needs to export more and will help companies able to expand its international presence activities.

“We are working with our companies to increase their access to global growth, wherever it is, and enable Quebec’s economy to truly take its place in the world.”

The Caisse is one of Canada’s asset managers, overseeing funds for Quebec’s public and private-sector pensions and insurance plans.

At the end of 2013, the Caisse had $200.1 billion in net assets under its management.

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