Desjardins is setting up a new investment vehicle for its institutional clients interested in private infrastructure.
These assets have been popular for some time with investors who seek diversification and volatility lower than that of the stock market.
“The opportunity was there and it remains there,” says Frédéric Angers, vice-president and head of infrastructure investments at Desjardins Global Asset Management. “We believe in the cycle of this asset class more than ever,” he adds.
“We will play in renewable energy, an area of expertise at Desjardins, but we will also be in telecommunications, transport, airports, roads and other sectors. ”
Frédéric Angers and his colleagues are enthusiastic because they anticipate great opportunities south of the border.
It is certain that we are monitoring the Biden plan for infrastructure. It doesn’t turn into opportunities overnight, but the backstory remains that there is a lot of demand for infrastructure and there is a lot of supply coming.
Frédéric Angers, Vice-President and Head of Infrastructure Investments at Desjardins Global Asset Management
He is thinking of the energy transition, the indebtedness of States which will force the participation of the private sector in projects, renewable energy, etc. The development of the battery sector also feeds its reflection.
Environmental, social and governance (ESG) criteria will be incorporated into investment decisions and Desjardins plans to invest “heavily” alongside its clients.
PHOTO PROVIDED BY DESJARDINS
Frédéric Angers, Vice-President and Head of Infrastructure Investments at Desjardins Global Asset Management
“It’s unique in the institutional market, an alignment of direct interest with a lot of money from Desjardins in transactions. We want to become a key player in the country, ”says Frédéric Angers.
The fund will target long-term equity investments in infrastructure capable of generating stable and predictable income.
The goal is to have more than $ 1 billion in the fund within 12 to 15 months and more than $ 3 billion within three to five years.
A range of expected returns of 7-9% over the long term is presented to investors wishing to diversify their portfolio.
What kind of project?
Asked whether the fund could invest here in projects such as the tramway or the third link in Quebec, Frédéric Angers replied that the fund mainly intends to invest in projects “contracted operational or with a view to being operational”.
“We can take construction risks, but not significant development risks. There are few transportation opportunities in Quebec. What we are currently observing in Quebec is at the pre-call for tenders stage. It’s not even in qualifying yet. We know of certain consortia that are forming. We talk to them. We could sneak in. But it’s not on our immediate radar. We are not a developer. We are no longer a financial investor, ”he says.
The fund’s “playing field” will be limited to OECD countries. “We aim to make two-thirds of the investments in Canada and the United States, and a third elsewhere in Europe and Australia, for example. We will not go to China, India or South America, ”explains Frédéric Angers.
He believes the fund is positioned to capture the opportunities that will arise over the next five to ten years. “It should support the size and return objectives that we set for the fund. ”
Desjardins Global Asset Management, which acquired Montreal manager Hexavest in the spring, is one of the country’s leading asset managers for institutional clients (insurers, pension funds, endowment funds, etc.). The organization’s assets under management stood at over $ 91 billion at the start of October. The 100 billion mark remains the target to be achieved by 2024.
The team that will take care of the infrastructure fund has been transferred from the Desjardins Group Pension Plan. This team is knowledgeable about infrastructure, having managed infrastructure investments with a focus on wind and solar power in North America and Europe.