April 6, 2012

Caisse: the people's conglomerate


One wonders what Lesage would think of what's become of the nest egg his government created for Quebecers 47 years ago. While critics question why a pension fund needs to be such an aggressively acquisitive entity, having a piece of some 4,000 companies in Quebec, Canada, the United States and around the world, there's no denying the Caisse has become a very "powerful economic lever."

There was a reminder of the scope and sweep of the Caisse last week with the announcement by the historic Fairmont Chateau Frontenac hotel of a $66 million renovation project. The 119-year-old castle and most identifiable feature of the Quebec City skyline was built by the Canadian Pacific Railway to attract and accommodate passengers along its nation-spanning track.

The very deep pockets of Ivanhoe Cambridge allow such a huge investment in one the world's prized lodgings, helping it compete in Quebec City's ferocious tourism market.

Besides the Chateau, major Canadian Pacific legacy hotels in Montreal, Ottawa, Toronto, Victoria and Vancouver are in the Caisse portfolio through Ivanhoe Cambridge. Guests at these hotels are also helping to boost my pension plan. As are the Fairmont hotels in Washington, D.C., and Seattle and the Hilton in Atlanta.

Heck, I could even retire at one of the Caisse-owned retirement compounds in Arizona, California or Oregon. I don't figure there's a discount for Quebec residents, though.

It hasn't been all smooth sailing for the Caisse. Management took a lot of heat for exposing the fund to a massive hit in the global economic crisis beginning in 2007. Critics noted that some risky paper investments the Caisse made cost it some $40 billion and undermined confidence in the people's pension fund.

The Caisse changed some of its investment policies as a result and its portfolio has gradually recovered from the loss.

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