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Canada’s second-largest pension fund plans to invest more than £8bn in the UK over the next five years, in a boost to chancellor Rachel Reeves as she seeks external investment to fund big infrastructure projects.
Caisse de dépôt et placement du Québec, which manages C$473bn (£254bn) on behalf of 6mn pension savers, planned to increase its allocation to UK assets by 50 per cent over the next five years, the fund’s chief executive Charles Emond told the Financial Times in an interview.
“We’d like to be a partner of trust and choice in the UK,” said Emond, adding that the government’s plans to increase infrastructure spending were “a huge opportunity and we’d like to be there in the early stages to see if we can do something”.
He added that the UK would be “top of the list” compared with many other countries in terms of “willingness, clarity, transparency, deal mode and execution, seriousness and welcoming us . . . from that perspective they stood out and I think real stuff will come out of it”.
CDPQ — one of the world’s largest infrastructure investors — currently invests C$32bn (£17bn) in the UK, with assets including stakes in Wales-based electricity generator First Hydro Company and London Array Offshore Wind Farm, located in the Thames Estuary.
The fund sold its stake in Heathrow airport late last year after owning it for more than 16 years.
Emond, who took the reins at CDPQ in 2020, a year after joining from Scotiabank, said he expected the fund’s allocation to Europe more broadly to grow from its current level of 15 per cent of the portfolio to as much as 17 per cent, with new investment focused on assets linked to the energy transition.
“In Europe, energy security matters a lot . . . governments have financial constraints . . . that’s where private capital like us can come in,” said Emond.
The Montreal-based fund’s plan to increase investment in the UK, as well as in France and Germany, comes as it is preparing to rebalance assets away from the US, which currently make up around 40 per cent of its portfolio.
The 52-year-old chief executive said the fund’s US exposure would probably be “trimmed a little bit” as it was “at a peak after a decade of outperformance”. But he added it remained the “deepest, biggest, closest market to us and we will continue to deploy money there”.
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CDPQ’s plan to invest more in Britain comes as 17 of the UK’s largest defined contribution pension providers have pledged to invest at least 5 per cent of assets in their default funds in British private markets by the end of the decade, a move the government hopes will drive £25bn of investment into the UK.
Emond said this commitment from UK pension funds could create a “positive synergy” and help attract more overseas investment into the UK. He said CDPQ was keen to invest alongside British retirement funds as “like-minded partners” with local knowledge.
The fund currently has C$25bn in France — its second-largest market in Europe — which Emond also expects to increase by 50 per cent by the end of the decade.
He added he was investing “time and effort” in exploring opportunities in Germany, with the country’s energy needs and loosened fiscal rules ushering in “a new beginning there with plenty of opportunities”.
