CDPQ and Al Gore Firm Unite for ESG Investments

Partnership acquires majority stake in fintech firm FNZ in first investment deal. 

Canada’s $238.1 billion La Caisse de dépôt et placement du Québec (CDPQ) and former Vice President Al Gore’s firm, Generation Investment Management ($18.5 billion), will team up for a long-term investment strategy in sustainable equities.

The partnership will start with a $3 billion stake in environmentally friendly businesses, which they deem to have solid management teams and long-term growth prospects. Fintech firm FNZ, which provides technology assistance to banks, insurers, and asset managers, is their first stake in a deal that values the company at £1.65 billion ($2.168 billion).

These investments, in both public and private equities, will last from eight to 15 years. While that’s longer than most such investments, CDPQ said the decision “better suits the objectives of sustainable value creation” for the success of the companies. The organization also said many of these ventures will be tech-heavy with their innovations.

David Blood, a senior partner at Generation, said he hoped the investment would inspire others.  “We hope it will catalyze a more sustainable form of investing in the capital markets,” he said.

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Michael Sabia, chief executive officer at CDPQ, Canada’s second-largest pension plan, called the partnership “a natural match between two like-minded organizations,” adding that both firms integrate environmental, social, and governance (ESG) principles “at the core of our investment strategies and believe they go hand-in-hand with attractive returns.”

Stéphane Etroy, CDPQ’s executive vice president and head of private equity, said FNZ has “significantly improved access, choice, and transparency of long-term savings for all consumers.” The firm will help consumers incorporate more sustainability factors into their investment decisions, he added.

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Yale Dives into Cryptocurrency

Could David Swensen’s move signal the start of institutional adoption for bitcoin and its ilk?

Believe it or not, David Swensen is dipping Yale’s toe into cryptocurrency.

The chief investment officer of the $29.4 billion endowment has invested an undisclosed amount in two separate cryptocurrency venture funds, Andreessen Horowitz and Paradigm, reports CNBC. Horowitz’ $300 million crypto fund had closed in June.

The implementation marks a key moment in the history of the volatile asset class, as large institutions have been absent from crypto denominations like bitcoin. Up to now, the support for the new currency has been mostly from retail investors and the occasional hedge fund. Billionaire George Soros’ family office, for instance, announced plans to trade the digital currency earlier this year.

But university endowments are different, as they are meant to support education. Swensen’s imprimatur could give virtual currency entrée to other such institutions.

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The asset class has had a wild ride over the past year, when crypto-mania ran wild as monumentally rapid gains turned many retailers into millionaires seemingly overnight. Bitcoin, the most popular cryptocurrency, neared $20,000 per coin in December.

Then, however, cryptocurrency ran into trouble in 2018. Since January, 50% of bitcoin’s value has been wiped out, as has 63% of all cryptocurrencies. Bitcoin now sits at $6,545 per coin.

Meanwhile, the infrastructure of trading the digital money has expanded, with an increase in crypto-focused funds to 389 from 227 this year. It has no shortage of supporters, like Mike Novogratz of crypto hedge fund Galaxy Digital. Some are even predicting bitcoin to hit upwards of $100,000 within a few years. Soros had once bashed the asset class, but has since changed his tune. Chase’s Jamie Dimon, Warren Buffett, and Bridgewater Associates’ Ray Dalio have all dismissed cryptocurrency as a bubble.

Either way, Swensen’s Yale investment model, which has stressed alternative assets, has logged a 20-year track record of 11.8% positive returns. So his going into cyber-currency could open the floodgates for adoption among the institutional investment world.

It is not known which cryptocurrencies the endowment invested in. Swensen was unable to be reached for comment, and Andreessen Horowitz declined comment.

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