CDPQ Allocates C$600 Million to Quebec's Fiera Capital
- Caisse de dépôt et placement du Québec, the province’s most prominent pension manager, has invested C$600 million with Fiera Capital (TSX:FSZ), a leading Quebec asset management firm
- The allocation is part of CDPQ’s ambition, announced in 2023, to more than double its allocation to Quebec asset managers to C$8 billion by 2028
- Fiera Capital, assets under management C$165.2 billion, delivers customized and multi-asset solutions across public and private markets to clients in North America, Europe and Asia
- Fiera Capital stock has added 25.38 per cent year-over-year, but has given back 25.79 per cent since 2019
Caisse de dépôt et placement du Québec (CDPQ), the province’s most prominent pension manager, has invested C$600 million with Fiera Capital (TSX:FSZ), a leading Quebec asset management firm.
Fiera will invest the capital in international expansion through its active and strategic fixed income and Fiera Atlas Global Companies strategies.
The allocation is part of CDPQ’s ambition, announced in 2023, to more than double its allocation to Quebec asset managers to C$8 billion by 2028. This pledge is in addition to the institution’s objective of reaching C$100 billion in Quebec-based investments by 2026.
Fiera’s capital infusion follows CDPQ’s investments in Quebec firms including Bastion Asset Management, Montrusco Bolton Investments and Van Berkom Global Asset Management, as well as widespread government and industry support for Canadian pension funds to increase domestic investments, foster innovation and bolster the country’s economic resilience.
Leadership insights
“Contributing to Quebec’s economic development is at the heart of CDPQ’s mission,” Vincent Delisle, executive vice president and head of liquid markets at CDPQ, said in a statement. “By entrusting C$600 million to Fiera Capital, a well-established and successful manager, we are benefiting from local financial expertise and supporting the growth of Quebec’s asset management industry, while also contributing to the diversification and performance of our portfolio.”
“CDPQ’s renewed trust in Fiera Capital, a pillar of Quebec finance, underscores our role as an investment leader,” added Maxime Ménard, president and chief executive officer of Fiera Capital Canada and Global Private Wealth. “Fiera Capital stands out for its ability to offer optimized portfolio solutions, combining innovation and precision in risk and return management. Our commitment to excellence allows us to meet the diverse needs of our clients.”
About CDPQ
CDPQ is one of the largest institutional investors in the world with more than C$434 billion in assets as of Dec. 31, 2023, spread across major financial markets, private equity, infrastructure, real estate and private debt.
About Fiera Capital
Fiera Capital, assets under management C$165.2 billion, delivers customized and multi-asset solutions across public and private markets to clients in North America, Europe and Asia.
Fiera Capital stock (TSX:FSZ) is down by 0.12 per cent trading at C$8.20 per share as of 9:53 am ET. The stock has added 25.38 per cent year-over-year, but has given back 25.79 per cent since 2019.
Private Capital Journal also reports CDPQ allocates $600M to Fiera Capital, part of an $8B allocation to Quebec fund managers:
CPE News (7.31.2024) – CDPQ has invested $600 million in Fiera Capital’s Active and Strategic Fixed Income and Fiera Atlas Global Companies strategies.
The investments is part of CDPQ mission/ambition to increase the funds entrusted to Québec asset managers to $8 billion by 2028. Within four years, CDPQ intends on more than doubling the amounts it entrusts to Québec fund managers.
This commitment is complementary to CDPQ’s global objective of reaching $100 billion in investments in Québec by 2026.
CDPQ has recently made investments in the Québec Emerging Manager Program (QEMP), and the Investi and Inovia Capital funds. It also entrusted sums to Québec portfolio firms including Bastion Asset Management, Montrusco Bolton Investments and Van Berkom Global Asset Management.
Earlier today, CDPQ issued a press release stating it is assigning $600 million to Fiera Capital as part of its ambition to allocate $8 billion to Québec fund managers:
CDPQ, a global investment group, today announced that it has invested $600 million with Fiera Capital, a leading Québec asset management firm, as part of its ambition to increase the funds entrusted to Québec asset managers to $8 billion by 2028.
This investment is part of CDPQ’s commitment to support Québec’s financial expertise and to stimulate growth in the local asset management industry. Within four years, CDPQ intends on more than doubling the amounts it entrusts to Québec fund managers. This commitment is complementary to CDPQ’s global objective of reaching $100 billion in investments in Québec by 2026.
The $600 million invested with Fiera Capital will also support the firm’s international expansion and will be allocated to its Active and Strategic Fixed Income and Fiera Atlas Global Companies strategies. In addition, CDPQ has recently made investments in the Québec Emerging Manager Program (QEMP), and the Investi and Inovia Capital funds. It also entrusted sums to Québec portfolio firms including Bastion Asset Management, Montrusco Bolton Investments and Van Berkom Global Asset Management.
“Contributing to Québec’s economic development is at the heart of CDPQ’s mission. By entrusting $600 million to Fiera Capital, a well-established and successful manager, we are benefiting from local financial expertise and supporting the growth of Québec’s asset management industry, while also contributing to the diversification and performance of our portfolio,” said Vincent Delisle, Executive Vice-President and Head of Liquid Markets at CDPQ.
“CDPQ’s renewed trust in Fiera Capital, a pillar of Québec finance, underscores our role as an investment leader. Fiera Capital stands out for its ability to offer optimized portfolio solutions, combining innovation and precision in risk and return management. Our commitment to excellence allows us to meet the diverse needs of our clients,” said Maxime Ménard, President and CEO of Fiera Capital Canada and Global Private Wealth.
ABOUT CDPQ
At CDPQ, we invest constructively to generate sustainable returns over the long term. As a global investment group managing funds for public pension and insurance plans, we work alongside our partners to build enterprises that drive performance and progress. We are active in the major financial markets, private equity, infrastructure, real estate and private debt. As at December 31, 2023, CDPQ’s net assets totalled CAD 434 billion. For more information, visit cdpq.com, consult our LinkedIn or Instagram pages, or follow us on X.
CDPQ is a registered trademark owned by Caisse de dépôt et placement du Québec and licensed for use by its subsidiaries.
It's Wednesday and I have to admit, when I first received this press release and only read the title, my first thought is why is CDPQ allocating to Fiera Capital and not other established funds here like Addenda Capital, LetkoBrosseau and others?
In fact, I fired off an email to Charles Emond, Vincent Deslisle and Kim Thomassin stating I have nothing against Fiera Capital but why not allocate to other established players too (and mentioned the firms above)?
Kate Monfette, Director of media relations at CDPQ, responded to my earlier email this afternoon:
In response to your question to Charles/Vincent/Kim, the allocation of external mandates depends on our needs for complementary and performance. Our team has carried out several analyses and other potential candidates should join the list in the coming years. We already have mandates with firms such as Montrusco, Van Berkom, and Bastion.
My mistake as after reading the full press release in detail and realized this is part of an $8 billion program to allocate to Quebec fund managers and there will likely be more large tickets to come to established Quebec investment managers.
I had no idea about this program at all, didn't even know CDPQ had given large allocations to Bastion Asset Management, Montrusco Bolton Investments and Van Berkom Global Asset Management.
I have mixed feelings about this program and will explain in detail below.
On the one hand, this is all part of CDPQ's dual mandate to deliver high risk-adjusted returns and to develop Quebec’s economy.
That part I get and take no issue with as we have some very established investment firms here that have very long and respectable track records (some better than others).
But when all is said and done that's $8 billion going to Quebec investment managers instead of going to the best private equity or global investment managers including elite global hedge funds.
Yes, CDPQ already invests there but the point I'm getting at is this: on the one hand we want Canada's large pension funds to invest more domestically which a case has been made but the flip side of this in my humble opinion is we need hell of a lot more transparency and accountability, just like we should have for foreign investments.
In other words, if CDPQ wants to allocate $8 billion to Quebec investment managers, great but please inform us of the exact criteria you're using, who is responsible for these allocations and what is the performance (short-term and long term) of these managers and the entire Quebec fund program.
I used to allocate to top global hedge funds when I was working at CDPQ 20 years ago (been that long) and saw my share of the good, the bad and the ugly in fund allocations.
More than anything, it's a relationship business and to be truthful, it's a very hard game to consistently produce decent returns.
The 2008 GFC rattled Ontario Teachers' mighty hedge fund program and shut down Desjardins Asset Management's fund of hedge funds which was the largest back then with over $5 billion in assets under management (they were over-allocated to "sophisticated" non-liquid strategies and got clobbered).
Since then, a lot of small hedge funds have sprung up in Quebec, some even got allocations from the Quebec Emerging Manager Program (QEMP), and the bulk of them have closed shop (again where is the transparency here???).
Seeding hedge funds is very tough, even guys and gals that come from elite hedge funds fail, so I was always very skeptical of this endeavour.
To be even more brutally honest, markets are tough, especially these markets where concentration risk is high as a few mega-cap tech stocks dominate the indexes.
Active managers have lagged their benchmark and I understand exactly why, and while this will not last forever, it's a very tough business managing money.
Every single day, I'm talking stocks BEFORE markets open and not just biotech stocks, all stocks with traders and investors I respect who know what they're talking about.
It's a crazy market when you see Tesla and Nvidia swinging like crazy but even in these markets, you can find gems (like AbbVie and Intact Financial Corporation here in Canada that are breaking out on their 5-year chart, making new highs, for example).
But there are so many risks, macro and idiosyncratic risks that managing money these days is anything but easy (it never was easy but it's increasingly getting harder and harder).
All this to say, there is an opportunity cost of investing in Quebec fund managers, it might be worth it because we are bolstering Quebec's economy and financial ecosystem but let's be completely transparent about it.
The other concern I have about this endeavour is some critics who email me stating we are going back to the old Quebec Inc days when Jean-Claude Scaire and Michel Nadeau were running the Caisse and giving handouts to Quebec companies and fund managers.
This "all in the Quebec Inc family" was disastrous back then precisely because there was no accountability and transparency and to be honest, it tarnished the reputation of the organization.
CDPQ isn't the old Caisse, that I'm sure of as post-Sabia there's a lot better governance, risk management and accountability and Charles Emond has maintained this.
But we cannot go back to the the old Quebec Inc ways and like it or not, these large allocations has a lot of people talking.
I'll give you an example. Someone told me Charles Emond and Fiera's CEO Maxime Ménard go back to their Scotiabank days, implying that’s maybe why they got the allocation. And Vincent Delisle also came from Scotiabank and also knows Maxime Ménard well.
So what? Maybe this has nothing to do with Charles Emond and Vincent Delisle. Maybe Quebec premier and Finance minister Francois Legault and Eric Girard told CDPQ to allocate these monies to Quebec fund managers at their discretion to bolster Quebec’s financial sector.
Whatever the case, my point is simple, when well-known Quebec investment firms get large allocations from CDPQ, people talk a lot and nasty rumours are spread easily.
This is why I personally am against Canadian pension funds investing in Canadian funds with some exceptions (like Brookfield and some other global elite firms).
Lastly, Fiera Capital's founder, chairman and global CEO, Jean-Guy Desjardins, is already very wealthy as are the founders of other established Quebec funds, so some may rightly ask "why are we making these people even richer using Quebec pension monies?"
Well, my answer to that is the same as if we were giving an allocation to Ken Griffin or Izzy Englander, if they can deliver the long-term risk adjusted returns, they merit the allocation. Full stop.
But again, we need full transparency here to know how this program is performing.
And one last thing, why not allocate $2 billion to internal global macro fund at CDPQ? I can personally suggest very experienced people with tons of experience that can make a lot of money internally without paying external managers any fees. Just pay them properly.
Alright, those are my thoughts on this topic, if you have anything to add, you know where to find me.
Below, a recent interview with Fiera Capital's founder, chairman and global CEO Jean-Guy Desjardins (in French) going over Canada's prospects after the latest federal budget.
I'll tell you right away, Canada is toast when the next global recession strikes and the sooner we get rid of the Liberals, the better off this country will be. FULL STOP!
Update: On Thursday morning, I had an opportunity to talk with Vincent Delisle, EVP and head of Liquid Markets at CDPQ to get more information on this $8 billion program allocating to Quebec fund managers.
Off the top, I apologize for misspelling his last name, it's Delisle not Deslisle, and he told me that was the purpose of this call (very nice guy and good sense of humour).
I thanked him for talking with me and Kate Monfette, Director of media relations for setting up the call.
To be sure, this comment generated a lot of private comments, some agreeing with me and some disagreeing with me, including my wife who told me this morning: "What do you have against Fiera Capital, it's a great shop!" (I replied: "Nothing honey, I'm shocked you read my comment since you only read them when you occasionally suffer from insomnia").
Anyway, that was the purpose of this call, to clarify a few things and it was constructive.
I began by stating a few investment managers contacted me post writing this comment to state they don't know the criteria for getting an allocation from this program and who is in charge.
Vincent replied:
First of all, we've been invested with Quebec asset managers for a long time. What we did last year was formalize a process and put it out there that we have been assisting top-performing managers in Quebec and we continue to do so.
That $8 billion mark was announced last year. We are already at $3.5 billion to $4 billion and these asset managers were onboarded, some for a decade and some more recently. We have firms like Van Berkom, Montrusco that have been with us for almost three years, Bastion which we seeded two and half years ago.We have some funds in private equity like Innovia and Novacap.
I'm somewhat surprised and I'm gong to use the word "surprised" for lack of a better word because one of the things we've done quite well is to sit down with pretty much everybody in Quebec's investment community over the last 12 months to discuss this program. We've had calls and meetings to explain this is what we are looking for.
First of all, it isn't that different because we have been invested with Quebec asset managers but post-announcement last year, we got a lot of calls and our external management team met with many, many people. So for that I'm somewhat surprised because if it's something we do quite well is communicate with the ecosystem here, whether it's Quebec companies we invest in or the asset management industry.
Now, that doesn't mean everybody is happy because not everybody is going to get a mandate but this is something that has been communicated pretty well over the last 12 months.
The only change from my opinion is that we formalized what we are already doing at the $8 billion objective. What has not changed is we are using the exact same criteria: performance criteria, complementary criteria whether it's a US shop, a Canadian shop or a European shop.
Performance is the number one criteria along with are these strategies complementary to what we are not doing right here in-house.
Here I interjected to get some clarification on whether that $8 billion announced last year was part of the $100 billion program to invest more in Quebec over the next five years.
Vincent explained:
No, this is something different, the $100 billion to invest in Quebec companies was announced by Charles (Emond) earlier and we are talking about investing in companies like WSP and CGI.This is different, it's a standalone program.
I continued asking him if this standalone program is part of Mario Therrien's group which looks at external managers and does the investment, operational and risk due diligence and places everything on the Innocap platform? I also asked him whether this is strictly public markets with some small allocations to private equity.
Vincent replied:
Yes, Mario Therrien's team handles the due diligence. The program spans everywhere. the announcement yesterday was for public equities but our objective is to look at every asset class including real estate, infrastructure, private credit, fixed income and hedge funds. The objective is to span everywhere and if we find performing asset managers in Quebec that fit into our portfolios, we take a look at them, it's not dedicated only to public equities.
I asked him if the ticket sizes are $500 million and above and he replied:
It really depends. The way it works is Mario Therrien's team are in charge of operational and investment due diligence but these allocations are all done with each head of portfolios. For instance, if Martin Longchamps in Private Equity is looking for a specific exposure and a Quebec asset manager pops up, then Mario will look at this asset manager alongside Martin Longchamps.
I'm involved in fixed income -- Liquid Markets includes fixed income, public equities and hedge funds -- so I will be involved alongside Mario in searching for managers in those areas.
What we found and what I realized when I joined is that the Montreal investment community punched above its weight. You may have different opinions but when you look at core outperformance and some of the success stories here in Montreal, there are a lot of firms that look attractive relative to the universe. That's how Montrusco came into our portfolio.
The criteria here is performance, we are not doing this to be nice.
I told him I agree but have had government officials including Senator Clement Gignac, my former boss at the National Bank, tell me that if pension funds invest in China or elsewhere, we need a lot more transparency and I think that transparency should be reflected in all investments including domestic ones.
I specifically told Vincent that we need to know the performance of this program because if we don't, then people start talking and spreading nasty rumours like "they're giving this money to their buddies."
But as I stated above it's all about performance, not making Jean-Guy Desjardins richer, and I agree there are some success stories in Montreal -- like Addenda and LetkoBrosseau and others. I told him Montrusco I don't know as well, met Sylvain Boulé the founder and CEO years ago and the firm knew some good and very challenging periods.
I also shared that the Quebec Emerging Manager Program (QEMP) has had a lot more flops than successes and they are not transparent about the attrition rate there (admittedly, smaller risk budgets, smaller allocations there). So who is held accountable for these decisions?
Vincent replied:
We don't communicate performance separately for other external managers. At the end of the day, the buck stops with the heads of each of the portfolios (across asset classes). So the heads of each portfolio make investment decisions and one of them is how much money we allocate externally and when we report our numbers, that's where the accountability is.
The Emerging Manager Program is a seeding one and I hear you on this one. In the $8 billion dollar program, we are (almost exclusively) focusing on established firms.
Montrusco you should spend time on because they are actually on of the best performers in global quality mandates. We gave them a ticket two and half, three years ago. When these firms that are top-performing go around saying we have the Caisse with us, for them it was an accelerator.
That's what we are aiming to do, if a firm is performing and fits/ complements our portfolio, we can help them get new clients and raise awareness, that's when it ticks all the boxes.
I agreed, once these firms have the CDPQ as a client, it lends a lot of credibility and I know Montrusco has turned the shop around since the GFC and is doing well
Lastly, I asked Vincent what he thinks of my idea of starting a $2 billion global macro fund internally where I would put him in charge of it.
He replied:
We already have one, we have an internal global macro/ cross asset team. The portfolio went live about 5-6 years ago. It used to be under Maxime Aucoin and when he left, I inherited that team so we already do it.
It's been adding value over the last five years. Most of our programs, 20-25% is external and the rest is managed in-house, and next time we have a big interview, I can talk about our internal teams, the performance has been very, very strong compared to the universe over the last three years.
We are very happy to accompany and promote Quebec money managers but I am extremely happy we have internal expertise here in Montreal managing global equity portfolios.
I reminded Vincent that we already did discuss the strong performance of internal equity teams last year when I covered CDPQ's 2023 mid-year results.
I also told him I have plenty of great people to recommend to him to significantly beef up CDPQ's internal global macro team and most of them are experienced men in their fifties or older (sorry, I don't know many women managing global macro funds).
Alright, let me wrap it up there, I need to get back to trading and then write my next comment later.
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