Caisse de Depot et Placement du Quebec, Montreal, plans to increase investments in energy and minerals to benefit from an expected commodities boom, CEO Michael Sabia said.
“Natural resources, energy, those are areas where we think there’s an opportunity to play offense because of what the structural trends are and what our capabilities are,” Mr. Sabia said in an interview at Caisse headquarters in Montreal.
The Caisse oversees C$135.8 billion (US$132 billion) in assets, and has stakes in Quebec gas distributor Gaz Metro and Suncor Energy, the country’s biggest oil company. Energy and materials shares made up more than half of the Caisse’s U.S.-listed stock holdings of US$11.3 billion as of June 30, according to an Aug. 11 regulatory filing.
Since his appointment last year, Mr. Sabia has tightened risk management standards, scaled back the use of derivatives and exited real estate loans that contributed to losses in 2009. Those moves, which Mr. Sabia calls “defensive,” helped the Caisse beat its benchmark in the first half of 2010 with a return of 2.3%. Two years ago, the fund manager reported a record loss of C$39.8 billion, or 25 percent.
“Defense is necessary, but it’s not sufficient in the long term,” Mr. Sabia said. “We also need an offensive game plan.
“When the Marshall Plan was launched after World War II, there was a 20- to 25-year run in natural resources and infrastructure, and in our view we are right at the start of another period like that,” Mr. Sabia said.
Mr. Sabia declined to provide details about his natural resources strategy. He said Caisse is “launching a bunch of work” to study the matter.
Mr. Sabia said Caisse would also consider investing in natural resources through its C$17 billion private equity arm.
“If the right transaction comes along and we have an opportunity to play a role, would we be prepared to take it in a sector that interests us quite a bit? Sure,” he said.