With Expectations of Commodities Boom, Caisse de Depot to Focus on Energy and Minerals

As demands for energy are expected to climb by as much as 40% in the next 20 years as incomes rise in emerging markets and as the global economy rebounds, the Caisse de Depot et Placement du Quebec plans to invest more heavily in energy and minerals.

(September 29, 2010) — The Caisse de Depot et Placement du Quebec, Canada’s biggest pension fund manager, aims to increase investments in energy and minerals.

According to Bloomberg, Chief Executive Officer Michael Sabia said investment in natural resources would position the fund to benefit from an unexpected commodities boom. More than half of the pension fund manager’s US-listed stock holdings are in energy and materials, Sabia told Bloomberg News in an interview. “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,” he said.

The Caisse oversees about $132 billion in assets including stakes in Quebec gas distributor Gaz Métro LP and Suncor Energy Inc., the country’s biggest oil company. An August 11 regulatory filing revealed more than half of the Caisse’s US-listed stock holdings of $11.3 billion consisted of shares in energy and materials.

Sabia has been touted for his “defensive” strategies, which have helped the Caisse beat its benchmark in the first half of 2010 with a return of 2.3%. “Defense is necessary but it’s not sufficient in the long term,” Sabia told Bloomberg. “We also need an offensive game plan.”

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Excluding its real-estate operations, Caisse has approximately 700 employees, with about two-thirds of the Caisse’s net assets coming from Canada.

To contact the <em>aiCIO</em> editor of this story: Paula Vasan at <a href='mailto:pvasan@assetinternational.com'>pvasan@assetinternational.com</a>; 646-308-2742

CIC to Avoid Defense, Casino, and Alcohol Investments

The $300 billion sovereign wealth fund's supervisory board Chairman Jin Liqun said at an address at the Super Return Asia 2010 conference that the CIC will not invest in areas with repuational risk -- such as defense, casino and alcohol-related sectors -- and sees more room to collaborate with global institutions.

(September 28, 2010) — The $300 billion China Investment Corp (CIC) will avoid investing in defense as well as casino and alcohol-related sectors, Reuters is reporting.

“We will not do anything that has a reputational risk for us,” CIC supervisory board Chairman Jin Liqun said at an address at the Super Return Asia 2010 conference, according to the news agency. He added that China’s private equity industry is set for growth in the years ahead, buoyed by a strong legal system and exit opportunities through initial public offerings.

Jin explained that China is on the road to becoming one of the most exciting markets for private equity in the world within the next decade. “Sovereign wealth funds such as the CIC are working on the basis on very high corporate governance,” he said, adding that the Chinese government has urged cross-border acquisitions and greater private participation following the financial crisis.

Jin reportedly declined to comment about whether the Chinese sovereign wealth fund will be involved in Sinochem’s likely counterbid for Potash Corp, the world’s largest fertilizer producer, in an effort to thwart BHP Billiton’s $39.6 billion hostile takeover offer for the Canadian company. China’s possible bid for Potash via the CIC reflects the priority that surplus-heavy countries are placing in pursuing strategic national goals by securing energy and food needs or buying industries they home to develop domestically, Reuters reported.

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To contact the <em>aiCIO</em> editor of this story: Paula Vasan at <a href='mailto:pvasan@assetinternational.com'>pvasan@assetinternational.com</a>; 646-308-2742