The REM and the Quebec tramway will have marked the year of the Caisse

For the Caisse de dépôt et placement du Québec, the year 2023 was the year when the REM and the Quebec tramway took precedence, in the public space, over its work as a fund manager.

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After years of planning, construction and testing, the Réseau express métropolitain was inaugurated with great fanfare at the end of July, in the presence of Prime Ministers François Legault and Justin Trudeau, the Mayor of Montreal, Valérie Plante, the CEO of the Caisse, Charles Emond, his predecessor, Michael Sabia, and former Prime Minister Philippe Couillard.

Quickly, the REM made the headlines for the wrong reasons: repeated breakdowns, noise disturbing the neighborhood, stations not sufficiently adapted to users with reduced mobility, poor signage, poor communications with customers, etc.

“We have to regain people’s trust,” acknowledged Marc Boucher, senior vice-president at AtkinsRéalis, one of the Caisse’s suppliers, at the beginning of December.

The REM will ultimately cost almost $8 billion, or 45% more than what was planned when the project was announced in April 2016.

Provided, of course, that there are no new cost overruns for the commissioning of the sections going to Deux-Montagnes, the Montreal-Trudeau airport and Sainte-Anne-de-Bellevue. For the moment, only the segment going to Brossard is open to travelers.

The difficulties that the Caisse experienced with the REM did not prevent the Legault government from entrusting it with three other mandates in the field of infrastructure this year.

University campus

In June, Quebec asked the institution to study the creation of a “world-class inter-university city” on part of the site of the former Royal Victoria Hospital in Montreal.

Then, in November, the government entrusted the Caisse with the task of trying to relaunch the Quebec tramway project, the estimated cost of which now exceeds $8 billion.

A few days later, Deputy Prime Minister Geneviève Guilbault added to this already tough mandate another review of the “third link” project between Quebec and Lévis.

“As is always the case when a new file is under study, a small dedicated team is formed,” explains a spokesperson for the Fund, Kate Monfette.

“External firms are also retained to support the teams,” she adds.

Finance and politics

Without really intending it, the Caisse is therefore immersed in an exercise with a strong political flavor, especially in the case of the two projects in the Quebec region.

The decision to appeal to the Caisse in so many cases may be surprising given that the government asked it to withdraw from the REM de l’Est project in 2022. Quebec was thus reacting to the numerous criticisms aroused by the route that the institution had proposed.

Despite everything, Yan Cimon, professor of strategy at Laval University, believes that the government did well to seek advice from the Caisse.

“It’s always a good idea to have an external opinion, especially since the Fund is now very active in infrastructure,” he emphasizes.

According to him, the institution is well placed to develop a financial package “which could help break the deadlock” in which the tramway project has gotten stuck.

In the longer term, it is perhaps the method of infrastructure planning that will need to be reviewed (again).

“The Fund cannot be the answer to all the problems linked to the development of major projects,” says Mr. Cimon.

The year 2023 for the Caisse in brief

Mixed return

The Caisse posted a return of 4.2% during the first six months of 2023, a performance comparable to that of other large Canadian investors. Over five years, the annualized return of the Fund, however, continues to lag behind that of CPP Investments and the Ontario Teachers’ Pension Plan.

Celsius: a head rolls

A little more than six months after the loss of $200 million in the collapse of the American cryptobank Celsius Network, the first head has rolled in this embarrassing matter for the Fund. Alexandre Synnett, who was head of technology, left the institution in February. He is now vice-president at CGI.

Investments in troubled waters

The Caisse’s massive investments in the French Alstom and the Indian Azure Power Global have once again given the institution headaches this year. The shares of both companies plunged on the stock market. The Caisse also lost most of the US$50 million investment it made in 2019 in Bird Global, an operator of electric scooter networks which has just declared itself insolvent.

Quebec Inc. in the sights

Cogeco, Solotech, Avenir Global, Vooban, Savaria, Norda Stelo, AMB Modulaire, Workleap… The Caisse has increased its investments in Quebec companies in 2023. On the other hand, the institution has not succeeded in preserving the head offices Uni-Select, Logistec and H2O Innovation. His attempt to reinvest in RONA also failed.

Departure from China

The Fund has just closed its Shanghai office. The institution has been present in China since 2009. Its investments in the country will now be managed from Singapore. The Caisse has reduced its exposure to China in recent years, but it still holds controversial investments, notably in companies accused of exploiting the Uyghur minority.