CDPQ Launches Investi Fund to Raise Standards in Finance

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Earlier this week, CDPQ launched the Investi Fund where Montreal's financial center will deploy an investment fund dedicated to ESG and sustainable finance, aiming to raise commitments of $1 billion:

On the occasion of the 3rd edition of the Sustainable Finance Summit, Innocap and Finance Montreal announce the creation of investment funds aimed at promoting the emergence and growth of investment strategies incorporating environmental, social, and governance (ESG) criteria and sustainable finance (the "Investi Fund"). The Investi Fund, which has gathered $300 million in expressions of interest for its launch from 10 potential investors, aims to raise commitments of $1 billion within 24 months.

A unique collaboration to build sustainable finance

Innocap, a global leader in managed account platforms, will act as the investment fund manager for the Investi Fund and will provide a rigorous institutional framework for due diligence, risk management, and ongoing monitoring.

The objectives of this initiative are to identify and grow the most innovative sustainable investment strategies and propel Quebec-based asset management firms specializing in ESG and sustainable finance. The Investi Fund also aims to attract renowned foreign asset managers to Quebec who are eager to establish dedicated teams for sustainable investment strategies, while highlighting more cutting-edge ESG practices within the asset management ecosystem.

The investment groups that have expressed interest in the Investi Fund - National Bank Investments, Bâtirente, Beneva, CDPQ, Desjardins, Fondaction, the Fonds de solidarité FTQ, the Trottier Family Foundation, Optimum Financial Group, and the Samara Family Office - may be interested in accessing established asset managers demonstrating the application of rigorous ESG integration methods and impact strategies in one or more of the following asset categories: equities, fixed income securities, hedge funds, and private investments.

"The potential participation of institutional investors will enable the Investi Fund to establish a rigorous governance structure, ensure full transparency on the fund's activities and portfolio assets, and provide continuous monitoring in sustainable finance to prevent greenwashing and promote best practices in sustainable investment. With the Investi Fund, our aim is to finally make sustainable finance a driving force in the influence of the Quebec financial industry," says Caroline Bergeron, Senior Director, Impact and ESG Solutions at Innocap.

"This is a strong signal being sent today. Once again, the Quebec financial sector demonstrates its great capacity to innovate in addressing common challenges. This potential collaboration would further enhance the international recognition of ESG expertise in Quebec and position the province as a center of excellence in sustainable finance in North America. I invite all stakeholders in the financial ecosystem to join this initiative," says Jacques Deforges, CEO of Finance Montreal.

A Call for Expressions of Interest and Applications

The Investi Fund will be managed by several established asset managers specializing in ESG and sustainable finance.  Asset management firms meeting these criteria are invited to express their interest and submit their applications online by June 30, 2023.

To be eligible, asset management firms will be evaluated based on several criteria, including the integration of responsible investment principles within their corporate structure and governance, the size of assets under management and performance history, as well as the presence of an investment team in Quebec to manage the proposed investment strategy or a demonstrated willingness to establish one in the short term.

Following a rigorous selection process to be conducted throughout the summer and thorough due diligence, the first selected asset management firms will be announced in the fall of 2023. The financial participation of institutions in the Investi Fund is subject to standard closing conditions.

Quotes

"The Investi Fund is a promising initiative for the future of finance, aligning with NBI's vision of placing responsible investment at the core of our decision-making. As a Quebec-based firm, we believe in the importance of nurturing local talent and expertise. The Investi Fund represents an excellent opportunity to contribute tangibly to the evolution of the sustainable finance ecosystem here."
Éric-Olivier Savoie, President and CEO, National Bank Investments

"As a leader in responsible investment, Bâtirente believes that actively managing ESG risks and investing in impact strategies contribute to the economic and social development of Quebec. That is why we are proud to partner with the Investi Fund and contribute to the development of Quebec's leadership in sustainable finance."
Éric Filion, CEO, Bâtirente

"At Beneva, we make various commitments to social responsibility and environmental, social, and governance issues, which demonstrate our firm determination to contribute to an economic development that is more responsible and environmentally respectful than ever before. That is why we are pleased to join a collaborative movement within the financial industry by participating in the Investi Fund. This action aligns with our ambition to transition towards a clean, sustainable, and greener economy."
Mélissa Gilbert, Executive Vice President and Leader of Financial Affairs, Beneva

“Taking ESG factors into account lets us better measure a company’s long-term viability and gain a deeper understanding of the risks it faces, so it’s important to equip asset management firms with the tools to adopt best practices. Contributing to Fonds Investi is one example of how CDPQ is taking additional action to help build a more sustainable economy.”
Mario Therrien, Head of Investment Funds and External Management at CDPQ

"The consideration of social impacts and the commitment to promoting long-term development that respects individuals, communities, and the environment are part of Desjardins' DNA. Financial institutions must integrate environmental, social, and governance factors to accelerate the transition towards sustainable finance. Desjardins welcomes this concerted initiative within the financial industry to launch a fund dedicated to ESG and sustainable finance."
Gildas Poissonnier, Head of Sustainable Development, Desjardins

"We are very pleased to participate in this initiative and to contribute our expertise, in order to continue to improve sustainable finance practices in Quebec and our collective impact, for a fairer, more inclusive, greener and more efficient economy."
Luc Verville - Chief Investment Officer Public Markets, Fondaction

"The Trottier Family Foundation is pleased to support the new Investi Fund. Our participation in the Great Canadian ESG Championship has shown us that through a robust evaluation process, it is possible to identify leaders in sustainable investment and avoid greenwashing. We applaud the creation of the Investi Fund, which will provide us with another excellent opportunity to invest our endowment fund in a way that advances our climate and sustainable investment goals."
Eric St-Pierre, Executive Director,  Trottier Family Foundation

"The integration of environmental, social, and governance criteria in investment decisions is now essential. We therefore welcome this commitment to mobilize major Quebec institutions for the development of local expertise in sustainable finance."
Saloua Benkhouya, Vice President, Private Investments and Impact Investments - Services, Fonds de solidarité FTQ

“Optimum Financial Group is proud to get involved and support this initiative. Our desire is to propel Quebec managers in sustainable finance and to increase responsible investments in asset management. Our commitment is already expressed through our portfolios by investing in sustainable companies based on ESG factors.”
Anabelle Blondeau, President and Chief Executive Officer, Optimum Group Inc.

"Samara Family Office is very proud to participate in the Investi Fund initiative. By working together with key players in the Quebec financial industry, we advocate for learning the best practices in sustainable finance and promoting responsible investment among Quebec families."
Catherine Janson, Chief Investment Officer, Samara Family Office

About the Investi Fund

Investi will be established as a family of investment funds created for the benefit of the sustainable finance ecosystem. With its dedicated sustainable growth capital, intended to be invested with experienced managers offering the best sustainable investment strategies, Investi aims to encourage the finance industry to adopt best practices in ESG integration and impact investing. Leveraging its collective intelligence, Investi is committed to raising industry standards to create lasting change in the world of finance. To learn more about the Investi Fund, visit www.investi.ca.

About Finance Montréal

Established in 2010, Finance Montréal, the financial cluster of Quebec, is at the heart of the development and promotion of Quebec's financial services industry and its positioning as a global business hub that is growing, competitive, attractive, and innovative. With its International Financial Center (CFI) team, Finance Montréal works to attract foreign financial companies to Montreal. The organization also focuses on fintech and innovation, sustainable finance, and talent development. As a hub for the financial community, Finance Montréal mobilizes its stakeholders around these areas, including the community built around the Montréal FinTech Station that it administers. To learn more about Finance Montréal, visit www.finance-montreal.com/en or our LinkedIn page.

About Innocap

Since 1996, Innocap has provided institutional investors with a superior model to structure, control, and access their alternative investments through its dedicated managed accounts platform. Innocap is the world's first dedicated managed accounts platform with $56 billion USD in assets as of December 31, 2022, >270 funds, and >$900 billion USD in client assets utilizing its technology. It benefits from strong and long-term committed institutional shareholders, including CDPQ, BNY Mellon, BNP Paribas, Fonds de solidarité FTQ, and Walter Global Asset Management. The Innocap team consists of more than 350 innovative professionals, and its robust financial technology operates from 7 offices worldwide, including its headquarters in Montreal. To learn more about Innocap, visit www.innocap.com/en or consult our LinkedIn page.

Let's dig deeper into what Investi Fund is all about:

What if we elevated the standards in finance?

Invested in a common mission, 12 major Quebec financial organizations have teamed up to launch Investi: the first investment fund created to benefit the sustainable finance ecosystem.

Through its innovation fund for sustainable finance, Investi invests in experienced managers who offer innovative sustainable investment strategies. Investi aspires to inspire the financial sector to adopt best practices in ESG integration and impact investing.

Thanks to its collective intelligence, Investi invests to elevate industry standards and make lasting change in the world of finance—and the world.

A $300M fund for more innovation in sustainable finance

Having raised $300 million through various interests prior to launching in the fall of 2023, Investi aims to raise up to $1 billion in assets. The fund will then grant mandates to experienced managers with the best ESG integration and impact investing practices, in four distinct asset classes: equity, fixed income, hedge funds, and private placements.

Eligible asset management firms

The firms chosen during the selection process must notably demonstrate how they stand out from their international peers in terms of integrating ESG factors and sustainable development strategies, in addition to fulfilling the following criteria. (Details in the application form.)
 

Eligible asset management strategies
 
The firms chosen during the selection process for proposed ESG integration or impact investing strategies must notably have a verifiable performance history of at least three (3) years for a similar strategy. Their strategies must also meet the following criteria. (Details in the application form.)
 
ESG integration
  • The strategy must reflect a solid and demonstrable approach to integrating ESG factors and take ESG materiality criteria into account.
  • The strategy must provide an approach for shareholder engagement, accountability and transparency for the ESG/sustainability factors.
  • The climate change strategy and assets must have undergone a full assessment by the investment team.
Thematic and impact investing
  • The strategy and applicable change theory must be consistent with the investments.
  • In addition to financial returns, the strategy must take several sustainability goals into account and furthermore demonstrate how the assets in the portfolio align with these goals.

Someone asked me what I thought of this initiative and I can't say I'm all that enamored.

A lot of ESG brouhaha but at the end of the day, If CDPQ and its partners are giving money to investment managers, all that counts is net return over a one, three, five and ten year period.

Capiche? Without sounding too cynical, I'm tired of phrases like "elevating the standards of finance".

Well, in my world of finance, there's only one standard: make money or die.

I personally couldn't care less if it fits someone's "ESG criteria," if it fits my investment criteria, then I pull the trigger.

But let me be fair to CDPQ and its partners even if I've had my fill of ESG, maybe they can find managers who are able to make money and fill all their rigorous ESG criteria.

Maybe, it's easier said than done.

Having said this, there is one lady that comes to mind, Lenka Martinek, Managing Partner at Sustainable Market Strategies and Nordis Capital.

Like me, Trahan and many others, Lenka worked at BCA Research and knows her macro very well. 

I would say she and her colleagues there -- Francois Bourdon, Craig Salway, Francois Boutin-Dufresne and Felix A. Boudreault -- know their stuff and they are good at sniffing out greenwashing.

I haven't seen their track record but have heard Lenka speak and she's very knowledgeable.

There are plenty of other asset managers in Montreal from Addenda to others who can win mandates from Investi but if it were up to me, I'd do something completely different to really build Montreal and Quebec City's asset management firms, regardless of whether they fit some stringent ESG criteria.

Remember my motto: make money or die, it's that simple. When you bust your back for every basis point, you realize how hard it is and don't have the luxury to care about ESG and other investment criteria that checks off the box at asset allocators.

Those are my admittedly primitive and biased thoughts on the Investi Fund. 

In other CDPQ news, Yana Watson Kakar will join the organization as Managing Director and Head of Americas:

CDPQ, a leading global investor, announced today that Yana Watson Kakar is joining the group as Managing Director and Head of Americas. CDPQ ranks among the largest institutional investors in the world with over $400 billion Canadian dollars in assets and 1,500+ employees across 11 offices in ten countries.


As Managing Director and Head of Americas, Ms. Kakar will be an integral member of the CDPQ Global Management team, contributing to the global strategy of CDPQ and its implementation, the development of key relationships across the public, private and civil sectors, and the deployment of constructive capital throughout the world.

Ms. Kakar will also serve as Head of CDPQ’s New York office and oversee our offices in Mexico and Brazil to promote the group in the wider region with key stakeholders. Ms. Kakar will work closely with the heads of the asset classes in developing CDPQ’s investment strategy and partnerships across the Americas region while strengthening the existing portfolio of constructive capital invested in private equity, fixed income, real estate, infrastructure, technology, and equity markets.

A seasoned executive and strategist known for building and leading top performing and diverse teams, Ms. Kakar brings a unique blend of business, investment, and policy expertise to the role. Ms. Kakar is the CEO of Growth for Good, a special purpose acquisition company focused on sustainable companies critical to the decarbonization of the global economy. Previously she was Global Managing Partner of Dalberg Advisors, a mission-driven multinational consulting firm specializing in policy, strategy, and investment advisory. In 2020, Ms. Kakar concluded two terms in the role having led the firm to triple revenues and grow to nearly 30 offices worldwide over the course of her tenure.

“We are truly delighted to have Yana join the CDPQ team to lead our Americas region. Her track record as an inclusive business leader, commitment to sustainable investing, and deep experience at the intersection of the public and private sectors will enable an immediate contribution to our constructive capital approach of creating solutions to the challenges that markets and communities face,” said Marc-André Blanchard, Executive Vice-President and Head of CDPQ Global and Global Head of Sustainability.

“As a Canadian educated in Québec – yet living in New York and working globally for over two decades – I am very happy to be joining CDPQ as Managing Director and Head of Americas, working on behalf of Quebecers alongside the highest caliber of investment professionals known for their commitment to creating better outcomes for people and the planet,” said Yana Watson Kakar.

ABOUT YANA WATSON KAKAR

An experienced executive with a track record of success both as a chief executive and as a counsellor to other CEOs, boards of directors, heads of state and the public service, and institutional investors across asset classes, Yana has dedicated her career to driving economic and financial returns through the application of socially inclusive and sustainable business and investment strategies.

Yana serves on the board of directors of Oxfam America and is a member of the Young Presidents Organization, the Women’s Forum of New York and 100 Women in Finance. Her perspectives have been published widely, including in Bloomberg, The Economist, The Financial Times, Forbes, The Guardian, The Huffington Post, and Yahoo! Finance. She is a dual citizen of the United States and Canada and holds a Master of Business Administration from The Wharton School at the University of Pennsylvania and a Bachelor of Arts from McGill University.

Ms. Kakar is very accomplished, holds an MBA from Wharton like Deb Orida and has tremendous experience in sustainable finance. She will be leading a great team at CDPQ heading up the New York office and overseeing the offices in Mexico and Brazil.

Bonne chance Madame Kakar!

Alright, let me wrap it up there as my mind is on stocks and macro these days, not pensions and ESG.

Looking forward to tomorrow's US jobs report and market reaction.

Below, Lenka Martinek, managing partner at Sustainable Market Strategies and Nordis Capital, joins BNN Bloomberg to discuss complacency in stocks markets these days (April 18, 2023).

I agree, stay cautious, the lack of breadth in the market isn't something to celebrate (it continued in May):

As I keep warning, don't buy the AI hype but don't be surprised if markets keep grinding higher before the big Kahuna (major recession) hits investors. Then it's going to be a rough couple of years.

Update: Tamara Close of Close Group Consulting sent me this after reading this comment:

Thanks for shining light on the Investi fund. My firm CGC is doing the ESG due diligence of the managers for inclusion into the fund. This will not be your typical ESG fund. The managers accepted will only be those with best in class, leading practices and truly innovative stratgies compared to global peers. We are going very very deep on the due diligence at both the fund and firm level for the managers. Will be super exciting to see who makes it through.

I feel reassured that CGC is doing a thorough due diligence on all potential managers and will track the Investi Fund closely.

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