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CDPQ makes progress on shift toward directs

In its latest earnings call, CEO Michael Sabia highlighted the pension fund’s investment in insurance company USI as an example.

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”. “In the first part of the year we have made much progress,” he said on Friday.

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 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, according to a source familiar with the matter.

During Friday's call, Sabia said CDPQ had also expanded its investments in the fintech sector through the purchase of an equity stake in AvidXchange, a provider of accounts payable and payment automation for midsize companies. CDPQ partnered with Mastercard, Temasek, and Peter Thiel to provide $300 million in financing for the company in June.

CDPQ’s equity investments – which include private equity – delivered a half-year net investment return of 6.7 percent, above the 5.9 percent index, and a five-year investment return of 14.5 percent, compared with an index of 12.6 percent.

Of the $9.7 billion of value added generated by the equity asset class, $2.2 billion was derived from the private equity portfolio, CDPQ said.

CDPQ did not respond to requests for further comment on the performance of its private equity programme.