Quebec’s main pension fund manager says it earned an average return of 3.5 per cent on depositors’ funds for the first six months of 2012.
The Caisse de depot et placement du Quebec says its net assets reached $165.7 billion as the end of June, up $6.8 billion from $159 billion at the end of 2011.
The fund’s investments contributed $5.4 billion to the increase and depositors made a net contribution of $1.4 billion.
Over a three-year period, the Caisse said it posted a 10.5 per cent average annual return.
It said all major asset classes had positive returns for this period, surpassing their benchmark
“Despite turbulent markets and a global economic downturn, the Caisse generated a positive return in the first half, in line with the long-term needs of its depositors,” president and CEO Michael Sabia said in a statement.
“Conditions will remain unpredictable for some time. Therefore, we will continue to focus on our long-term objectives as we’re involved in a marathon, not a sprint.”
Shortly before issuing financial report, the Caisse announced it has decided to sell part of its stake in U.K. airport operator BAA for $393.6 million, as part of a larger transaction.
‘Conditions will remain unpredictable for some time.’—-Michael Sabia, CEO, Caisse de depot et placement du Quebec
The Caisse will continue to have a 15.55 per cent stake in BAA, down from 21.18 per cent. The Caisse says the transaction will allow it to rebalance and further diversify its portfolio of infrastructure assets.
Earlier this summer, the pension fund manger said it would become more selective in its stock market picks and put more emphasis on private placements in infrastructure and real estate.
Caisse head Michael Sabia said in June that the Caisse has had better returns in recent years from private companies, real estate and infrastructure.
The changes would be made gradually as the pension fund manager does more in-depth study on its investments to keep volatility in check, he said.
More recently, the fund has become embroiled in the controversial $1.76-billion unsolicited takeover bid late last month by U.S.-based home improvement retailer Lowe’s for Quebec-based Rona.
Rona has said it isn’t interested in the $14.50 per share offer, which would give Lowe’s a bigger foothold in Canada, Rona says undervalues the company. The Quebec government has also criticized the bid as not in the best interests of either province or Canada and is examining ways to counter the Lowe’s offer.
The Caisse, for its part, quickly announced it had increased its stake in Rona by two percentage points to 14.2 per cent as it noted the economic benefits of having Rona’s head office in the province.
“As a significant Rona shareholder, and on the basis of these criteria, the Caisse will follow very closely the evolution of this file as well as the performance of the company,” the Caisse said in a statement.
The powerful Caisse has acted before to protect interests it sees as vital to Quebec’s economy. In 2000, the Caisse did not support a bid by Rogers Communications Inc. to buy Quebec cable company Videotron and joined forces with Quebecor Inc. to thwart the Toronto company’s bid.
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