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Caisse to embrace global outlook in new investment strategy

Caisse de dépôt et placement du Québec President and CEO Michael Sabia speaks during a press conference where he announced the 2013 financial results of the public pension fund investor in Montreal, Wednesday, February 26, 2014.

Graham Hughes/THE CANADIAN PRESS

Quebec's giant pension manager says it has a new strategy to become more global in its outlook, shifting its sights from a focus on Quebec investments to a broader international approach with new overseas offices in countries such as Mexico and Singapore.

Michael Sabia, chief executive officer of the Caisse de dépôt et placement du Québec, said Monday that both the Caisse and Quebec businesses more broadly need to adopt a more global investment perspective.

"It is our responsibility, our duty, to become this global organization able to search for yields where they can be found and to serve as a bridge toward the world for the Quebec economy," Mr. Sabia said in a speech to the Montreal Council on Foreign Relations.

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"It will be one of the cornerstones of our work for the next five years."

While the Caisse already has offices in New York and Beijing, Mr. Sabia said the $200-billion fund, which invests money for Quebec public and private pension and insurance plans, will expand its New York office and open new offices in Washington, Mexico and Singapore. It will eventually also open offices in Mumbai and Sydney, he said.

He said the Caisse needs to be more global to earn the returns it needs, but said it needs to be done strategically in countries and companies with the best long-term growth prospects. Finding them requires staff on the ground who know local business markets, he said, and can help the Caisse get access to the best deals.

"We need to identify the locations and the most suitable projects – the most interesting for us that are best aligned with our goals," he said. "And to get your hands on each of these opportunities, the competition comes down to one word: fierce."

Mr. Sabia said the Caisse will also work with Quebec companies it owns to help them become more global in their outlook. He said Quebeckers should not be "deluded" about the depth and size of their home market, which accounts for just 0.3 per cent of the global economy.

International exports from Quebec have fallen by 1 per cent annually since 2000 and account for 27 per cent of GDP, he said, down from 42 per cent in 2000. Productivity in the United States and the rest of Canada has increased annually at three times the rate it has in Quebec, he said.

"If we want to reverse the economic situation, it is necessary to participate much more intensely in global growth," he said.

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As a result, he said the Caisse will identify and invest in Quebec companies that can position themselves for global markets and will encourage entrepreneurs who are "facing the world."

"Doing business in the entire world must become a reflex in Quebec – a contagious reflex," he said.

The Caisse has already laid the groundwork for boosting its foreign investing by hiring private equity fund manager Andreas Beroutsos last month to head a new private equity and infrastructure team focused on investments outside of Quebec. It also hired former World Bank official Rashad Kaldany last year to head its emerging markets investment team.

Mr. Sabia said one area of focus for foreign investing will be the agri-food sector as millions of people a year join the middle class and want "more food of better quality." He said he is also interested in real estate investments, such as shopping malls and residential housing, in developing economies, as well as infrastructure investments such as roads and airports.

The Caisse will also look for investments that take advantage of changes to the way energy is produced and distributed in North America and in many other countries, he said.

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About the Author
Real Estate Reporter

Janet McFarland is the real estate reporter for The Globe and Mail’s Report on Business, with a focus on residential real estate trends. She joined Report on Business in 1995, and has specialized in reporting on corporate governance, executive compensation, pension policy, business law, securities regulation and enforcement of white-collar crime. More

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