La Caisse eyes separate accounts

The C$176bn system is increasing its direct private equity investment activities and will likely pursue establishing separately managed private equity accounts in coming years.

Caisse de dépôt et placement du Québec’s private equity portfolio posted a 13.6 percent return in 2012, nearly double the 7.1 percent return from the previous year.

The C$176.2 billion ($174.7 billion; €133.3 billion) system, which manages institutional funds primarily from public and private pension and insurance funds in Québec, had roughly 55 percent of its private equity portfolio in direct investments as of 31 December 2012, with the remaining 45 percent in funds.

“That’s probably going to [continue] increasing on the direct part of the story and decrease on the indirect part,” Roland Lescure, executive vice president and chief investment officer of La Caisse told Private Equity International, adding that the Caisse will likely also move more toward establishing separately managed accounts on the fund investment side.

I think the future of indirect investing has a lot more to do with segregated accounts than with funds.

Roland Lescure

“I think the future of indirect investing has a lot more to do with segregated accounts than with funds,” he said. “Yes, we’re going to have more and more directs, but also the way we do indirects is going to change.”

La Caisse is also in the process of making broader changes to its alternatives portfolio. Last year, following a review of its “strategic orientations”, La Caisse established a new investment strategy that included increasing its investments in private equity, infrastructure and real estate “in the years to come”, according to its 2012 annual report.

“We have talked about C$12 billion dollars of more investments in illiquid markets, which is close to 7 or 8 percent of our fund, so it’s quite a big [change] over the next two to three years,” Lescure said.

La Caisse also is focusing on investing more in Quebec “to generate returns and contribute to its economic development”, according to the annual report. Roughly 39 percent of La Caisse’s private equity portfolio is invested in the US, with about 28 percent in Quebec, 20 percent in Europe, 8 percent in non-Quebec Canada and 4 percent in Asia-Pacific.

During the past four years, La Caisse’s private equity portfolio has generated a combined return of 14.3 percent.

With C$17.8 billion of total private equity assets, La Caisse has an actual allocation to private equity of 10.2 percent and a target allocation of 9.9 percent, as of 31 December 2012.

The system’s entire portfolio generated a 9.6 percent overall return in 2012.