The Quebeq public pension fund Caisse de Dépôt et Placement du Québec (CDPQ) is turning the challenge of not finding suitable investment opportunities into an opportunity.
While many long term investors seek sustainable, attainable and low risk long term income, they usually approach financial intermediaries such as banks. Some investors go directly and invest in projects, including infrastructure projects offering higher risk, as it is not spread, and higher returns. CDPQ goes one step further and is itself becoming an operator in Montreal according to a recent IRJ article.
After the fund has invested over a billion in the rolling stock and plane manufacturer Bombardier, the company seeks to invest another 3 bn Canadian Dollars into an automated urban transport system in Montreal. Such a model of a public-public partnership could prove to be an efficient budget allocation model as it allows ample investment opportunities for both sides while providing a positive cause for the local economy and employment opportunites.
We will see in the years to come if this model pays out or if the challenges to manage such an operation are too far away for a pension fund.