CDPQ pension fund plans to invest $ 12 billion in European and UK assets

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One of Canada’s largest pension fund managers has unveiled plans for a C $ 15 billion ($ 12 billion) spending spree on private assets in the UK and Europe as part of a significant expansion of its efforts to increase overseas yields.

Caisse de Dépôt et Placement du Quebec (CDPQ), the C $ 400 billion global investment group, told the Financial Times that it plans to deploy these funds in the region over the next four years, the Kingdom -Uni standing out because of its “commercial position.”

The investment manager’s allocation to Europe represents around 14% of its international portfolio and is “concentrated in the UK and France,” Charles Emond, president and CEO of CDPQ, told the Financial Times in a report. interview.

“We plan to increase this figure in the coming years, mainly due to the opportunities we see across Europe for private investment in our areas of expertise and interest, including financial services, technology financial, private credit, infrastructure, real estate, health and energy transition, ”Émond said.

The Fund, which invests on behalf of pension and insurance schemes with millions of members and policyholders, said it would continue to invest in the UK and France, but that it “was also near »other European countries such as Germany, Spain and those in the Nordic region. Over six months at the end of June of this year, the Caisse posted a return of 5.6%, higher than the return of 4.4% of its benchmark index.

As part of its plan to strengthen its European portfolio, the group plans to increase the size of its London team from 40 to 70 over the next year and a half. “Europe generally offers opportunities, but the UK (with C $ 22 billion in investment) is at the center of it all,” Emond added.

La Caisse has revealed its European ambitions as cash-strapped governments around the world court foreign capital in an attempt to leverage funding for infrastructure programs and finance their transition to low-carbon economies.

Emond was one of dozens of global asset management executives who attended a UK government investment summit in London last week hosted by Prime Minister Boris Johnson. “I have to say I was impressed with the sales pitch,” said Emond. “They really stand out as a pro-business. “

He added: “I believe the UK is positioning itself as a leader in sustainability and sustainable investing. ”

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The CDPQ is also one of the world’s largest investors in renewables, such as wind farms and solar power, areas that the UK and other governments see as prime targets for private investment.

In September, the Caisse announced its intention to accelerate its climate strategy by taking action, including offloading oil producers from its portfolio by the end of 2022 and holding C $ 54 billion in green assets by 2025.

Emond said it was getting harder and harder to find green assets at a good price: “ESG entries are record high, so buying existing renewable assets you’re paying through the nose,” he said.

Likewise, he said the infrastructure was “a congested space” with large institutional investors, including Australian and Dutch pension funds, vying for the same deals. About C $ 150 billion of the C $ 400 billion portfolio is in assets that do not trade on public exchanges, including private equity, real estate and infrastructure.

As part of its global investment ambitions, the Caisse also plans to increase its exposure to China from around 4% of its current overall portfolio to 5 to 10% over the next few years. About three-quarters of this tranche is in public stocks, with smaller allocations to private equity and real estate.

China is increasingly focusing on its human rights record, but Emond said the investment could align with the fund’s ESG principles. “I understand and recognize broader social issues, but the reality is that there are [a] way to make responsible investments in China in certain companies, but you have to be selective, ”he said.

Ten years ago, two-thirds of the fund was invested in Canada and one-third in the rest of the world. This proportion is now reversed and “we continue on this trend because we have to be diversified”.

“There is a lot of capital for the same assets. You have to be smart about what you buy where you buy.


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