Caisse Posts $20.1 Billion Boost in Net Assets, Driven by PE, Infrastructure

The Caisse de Depot et Placement du Quebec has almost rebounded from a disastrous 2008 performance, with infrastructure and private equity holdings helping the investment giant to outperform its benchmark index by 4.1%.

(February 25, 2011) — After suffering a $40 billion loss in 2008, the Caisse de Depot et Placement du Quebec has reported that it posted a 13.6% return in 2010 investment, with net assets up $20.1 billion to $155 billion (C$151.7 billion).

The gains, the fund said, were driven by private equity, infrastructure, stocks and fixed income.

“In a year marked by turbulence, Europe’s sovereign debt crisis and fears of a slowdown in the US, the Caisse generated strong results on many fronts,” said Michael Sabia, the Caisse’s President and Chief Executive Officer, in a release. “Our teams successfully repositioned the Caisse to focus on its core business and select quality holdings, while managing the portfolios prudently to take advantage of hard-to-predict market conditions. Of course, we understand that, ultimately, the most important thing is our long-term performance.”

Following a rebound in global markets, net investment income was $18 billion, up from C$11.8 billion a year earlier. According to a January report by RBC Dexia’s investment services unit, the Caisse surpassed the 10% return of Canadian pension funds last year.

The release by Caisse noted that the fund’s C$17.5 billion private equity unit achieved stellar growth with a 27% return. In December, the fund reported that despite a relatively quiet year in 2010, the private-equity arm of the Caisse planned to add to its team to invest in Quebec companies. The fund said it was planning on boosting staff at its private equity unit by around 25% in 2011 as it pursues its mission to contribute to the economic development of Quebec.

Meanwhile, the C$4.3 billion infrastructure unit returned 25%, while equities, the Caisse’s biggest asset class, returned 15%. US stocks increased 10%, while the Caisse’s emerging-markets equities holdings returned 12%.

Sabia concluded in the release that here are many uncertainties remaining, including the situation in North Africa and the Middle-East and the sovereign debt crisis in Europe. “Moreover, in the United States, employment levels stagnate, the housing crisis persists and, at the same time, the exit strategy for expansionary monetary and fiscal policies is far from finalized,” said Sabia. “We posted solid results in 2010, but we know we have much work to do to provide good long-term returns to our depositors — given the current uncertainty and market volatility that will prevail in the coming years.”

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