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Canada’s second-largest pension fund is expected to invest more than £8 billion in the UK over the next five years. Prime Minister Rachel Reeves is seeking external investment to fund large infrastructure projects.
The Caissed Epôtet Placement du Québec manages $4730 billion (£25.4 billion) on behalf of a 6 million-year pension saver, and plans to increase its allocation to UK assets by 50% over the next five years.
“We want to be a partner in UK trust and choice,” Emond said, adding that the government’s plan to increase infrastructure spending is a “great opportunity and we want to be in the early stages to see if something can be done.”
He added that the UK will be “top the list” compared to many other countries in terms of motivation, clarity, transparency, trading mode and execution, severity and welcoming us.
CDPQ, one of the world’s largest infrastructure investors, currently invests $320 billion (£17 billion) in the UK, with assets including stakes in the Wales-based power generators’ first Hydro Company and London Alley Offshore Wind Farm.
The fund sold its shares in Heathrow Airport later last year after owning it for more than 16 years.
Emond, who won the reins at CDPQ in 2020 in 2020, a year after Scotiabank, said he hopes for new investments that will grow more widely from 15% of the current portfolio to 17%, and focus on assets related to energy transitions.
“In Europe, energy security is very important. There are financial constraints in government, which allows private capital like ours to come in,” Emond said.
The Montreal-based fund’s plans to increase investments in the UK, France and Germany are prepared to recalibrate its assets away from the US, which currently accounts for around 40% of its portfolio.
The 52-year-old chief executive said the fund’s US exposure was “at peak after a decade of outperformance,” so it would likely be “trimmed a bit.” But he added that it is “the deepest, largest, closest market for us, and we will continue to deploy money there.”
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CDPQ’s plan to invest more in the UK is because 17 of the UK’s largest defined contribution pension providers have pledged to invest at least 5% of their assets in default funds in the UK national market by the end of the decade.
Emond said the commitment from the UK pension fund will create a “positive synergy” and help increase overseas investment in the UK. He said CDPQ is keen to invest alongside the UK Retirement Fund as a “like-minded partner” with local knowledge.
The fund currently has $25 billion in Europe, with $25 billion in France. This is expected to increase by 50% by the end of the decade.
He added that he has invested “time and effort” to explore opportunities in Germany, loosening the country’s energy needs and fiscal rules that led to “a new beginning with many opportunities.”
