It is now known that Quebec has lost control of several of its flagships to foreigners. We only have to remember the Bombardier C Series (A220) sold to the French multinational Airbus, Camso to the French giant Michelin, RONA to the American Lowe’s, Atrium Innovations to the European fund Permira, Laboratoires Paladin to the American Endo Health Solutions, Alcan to the Anglo-Australian Rio Tinto, Provigo to the Ontario Loblaws, etc.
On the long list of sales to foreigners, we have just added the Quebec companies Fourgons Transit, AGA Assurances collectives, Plusgrade, Uni-Sélect, Opsens, H2O Innovation, Logistec and QSL International.
What is the problem? Are we lacking investment capital? Absolutely not. Not only can we count on Investissement Québec, the Fonds de solidarité FTQ, Fondaction CSN, several funds specialized in venture capital… but we also have in Quebec the second largest pension fund in Canada, the Caisse de dépôt and placement of Quebec.
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But all these major Quebec investors obviously make investment choices based on their priorities. Quebec companies which passed into the hands of foreign companies were clearly not among their priorities.
Let’s take the Caisse de dépôt
With its net assets of $434 billion, we agree that the Caisse alone would have the means to control a ton of Quebec businesses and protect them against foreign takeover. When it does not intervene during an acquisition attempt by foreign companies, it is because the directors of the Caisse simply do not see the importance.
The Caisse’s investments in Quebec total assets of $88 billion. This represents 20.3% of the Fund’s net assets. 10 years ago, the weight of the Caisse’s investments in Quebec amounted to 26.1% of the Caisse’s net assets. We are therefore talking here about a decline of 6 percentage points.
Under the senior leadership of Charles Emond, who has directed the destiny of the Caisse since January 2020, the weight of Quebec in the overall assets of the Caisse recorded a slight increase, going from 19.6% (in 2019) to 20.3% (in 2023).
Archive photo, Pierre-Paul Poulin
Quebec monopolizes the very large portion of the $117 billion in assets that the Caisse holds in Canada.
A pan-Canadian problem
Quebec is obviously not the only Canadian province which sees several of its flagships pass into the hands of foreign companies.
And what is one of the main causes? It is quite simply the lack of interest of large Canadian pension funds in the shares of Canadian companies listed on the stock exchange.
Supported by a hundred senior executives of Canadian companies, the portfolio management firm Letko Brosseau has criticized the country’s pension funds for divesting themselves of Canadian stocks, and has been doing so for several years.
As proof, Canadian pension funds have considerably reduced their participation in Canadian companies listed on the stock exchange. While Canadian stocks accounted for 28% of their total assets at the end of 2000, they now represent less than 4% of their assets.
Towards special regulations
To correct the situation, Letko Brosseau and business people are asking the federal and provincial governments to modify their pension regulations in order to force Canadian pension funds to invest more in Canadian companies.
In the entirety of the Caisse’s gigantic portfolio, Canada monopolizes 27% of total assets, including 20% in Quebec. The United States accounts for 38%, Europe for 16%, Asia-Pacific for 12%, Latin America for 4% and the rest of the world for 3%.
The largest pension fund in the country, the Canada Pension Plan (CPP Investment), performs poorly when it comes to investing in Canada.
Of its total $591 billion in net assets, barely 13% ($75.6 billion) is invested in Canadian companies. CPP Investments favors the United States (40%), Asia-Pacific (23%), Europe (18%). Latin America accounts for 6%.
For its part, the Ontario Teachers’ Pension, the third largest Canadian public fund, has a higher Canadian fiber than CPP Investments and the Fund. Canada’s weight in Teachers’ $250 billion portfolio accounts for 33% of total assets.