CDPQ makes progress on shift toward directs

In its latest earnings call, CEO Michael Sabia highlighted the pension fund’s new partnership with GE Capital Aviation Services.

Caisse de dépôt et placement du Quebec posted a return of 5 percent for the six months ended 30 June, beating its benchmark by 0.2 percent.

In a media call to discuss the results, president and chief executive officer Michael Sabia noted that five-year results are “very similar” to those posted in February.

He added that CDPQ has made progress in “executing our strategies that always seek opportunities to diversify our sources of returns”, specifically pointing to its fixed-income category, through which it invests its private debt. “In the first part of the year we have made much progress,” he said on Friday.

In June, CDPQ announced a partnership with GE Capital Aviation Services through which it created a $2 billion aircraft financing platform. The vehicle acquires fuel-efficient airplanes and leases them back to the air carrier that sold the CDPQ-GE Capital platform the aircraft.

Separately, in April CDPQ backed Montreal-based engineering and construction company SNC-Lavalin’s acquisition of British engineering and design firm WS Atkins by providing $1.9 billion of financing, which included $1.5 billion in debt.

Last month, the Canadian pension plan announced it had teamed up with Sprott Resource Lending to provide $180 million in debt financing to Québec Iron Ore, a subsidiary of Champion Iron, to restart operations at Bloom Lake Iron Ore Mine.

In private equity, that progress took the form of moving “toward the objective of continuing to increase our focus on direct investments in the best companies with the best partners in the world,” Sabia said.

In March, CDPQ partnered with KKR to acquire USI Insurance Services, a US insurance brokerage and consulting firm, from Onex Corporation for $4.3 billion, as reported by Private Debt Investor sister publication Private Equity International.

The transaction is the first to emerge from a partnership between KKR and CDPQ that will focus on long-term investments in stable businesses with the aim of holding assets longer than the three to five years typical in private equity, a source familiar with the matter told PEI.

CDPQ did not respond to request for further comment on the other opportunities in private debt or its deal pipeline. -Andrew Hedlund contributed to this report.