Felix Chee appraises a platter of crisp, glistening fowl with a careful eye and then leans over the table to share a thought.
"The Peking Duck here is among the finest in the world," he says, falling back into a chair at Toronto's casually elegant Lai Wah Heen restaurant. "It is all about the freshness of the meat and the oil."
Mr. Chee has made a career out of finding winning combinations. Ever since he and his wife Margaret immigrated to Canada from Singapore in 1974 with two suitcases and $5,000 in their pockets, the 64-year-old businessman has shown a talent for marrying foreign knowledge and money with local institutions.
He rose to prominence on Bay Street in the early 1980s as an innovative financial manager at Ontario Hydro, which was among the first to import then-exotic derivatives to Canada to reduce interest rate and currency risks on the utility's bonds. More recently, Mr. Chee nudged China's sovereign wealth fund to its most successful direct investment ever, when he convinced China Investment Corp. to bet $1.5-billion (U.S.) in 2009 on embattled Teck Resources Ltd. That investment is now worth $5.4-billion.
In January came "the highlight" of Mr. Chee's career, when CIC opened a Toronto office with him at the helm as its chief representative. The world's fifth-largest sovereign wealth fund, with $332-billion of assets, snubbed larger capital markets by opening its first non-Asian office here, putting Mr. Chee in a unique position to help build the fragile economic bridge that links Canada's resource riches with the world's fastest-growing major economy.
Mr. Chee says the new office partly reflects the gratitude of officials at state-owned CIC that Canada "is a welcoming place" for its investments. "They don't want to be where they are not wanted."
But people familiar with the fund say the location of the new office is also a gesture of thanks to Mr. Chee, who temporarily left his home and family in Oakville in 2008 to move to Beijing to help build the Chinese fund. During that time, he pushed CIC's somewhat reluctant officials to shift their focus on resource investments from nearby Australia to Canada.
It was his persistence that is credited with overcoming resistance in China - and on Teck's board of directors - to a $1.5-billion equity investment that helped the Canadian mining company get out of financial trouble in 2009.
Mr. Chee, whose contract expires in 2014, said he has two remaining ambitions: He is on the hunt primarily for minority stakes in resource, infrastructure and real estate ventures that will deliver strong returns. But a bigger challenge is to dispel Western fears that CIC is a puppet of a centralized Chinese government seeking to control Canada's valuable resources.
"Obviously there is a perception and concern about China and the controlling of resources," says Mr. Chee. CIC, he says, is a "financial investor" and "it does not seek control" in any Canadian company.
Contrary to what some Westerners think, "China is not a monolith," he continues. CIC is one of several state-owned entities that answer to a variety of different officials and they have devoted over $100-billion to acquire long-term interests in foreign companies and securities.
"Actions will speak louder than words. Hopefully by the transactions we do, it will help people here, the government, regulators, businesses and investors understand CIC and China much more. What we do will also be a template for how Chinese companies can invest abroad by thinking of all stakeholders."
During a leisurely three-hour lunch of succulent duck crepes and tea, Mr. Chee speaks candidly in a deep, gravelly baritone about his career and his new mandate. He is tall and thin with a neatly shaved head, and when he stands he favours one leg, which was badly injured during a car accident last year that left him bedridden for months.
Mr. Chee's background makes him uniquely suited to help nurture stronger business ties between China and Canada. A descendant of educated, middle-class Chinese from the southwestern Chinese province of Guizhou (his grandmother had bound feet), he was born and raised in Singapore and educated in Britain.
His upbringing gave him the advantage of seeing China through an international lens. And his successful career in Canada has earned him credibility with local bankers and directors who have little experience with Chinese investors.
This unique background was instrumental in "bridging the gap" between Teck's board of directors and CIC when the mining company was scrambling to raise cash to pay huge debts that were coming due. Though Teck was in need, people familiar with the talks said some of its directors were concerned that CIC had a secret agenda to help one of China's mining giants seize control of the Vancouver company.
"The takeover negotiations were 20 per cent [about]price and 80 per cent how to deal with China Inc."
That Teck was hesitating at such a time of need frustrated some of CIC's senior officials, sources say. They credit Mr. Chee for keeping talks open and eventually convincing both sides that the investment was in everyone's interest.
That deal opened doors, too, to other resource companies that are willing to tap CIC's huge pool of cash in exchange for selling a minority interest. Last year, CIC agreed to spend $1.2-billion to acquire a small stake in Penn West Energy Trust and help finance an oil sands venture. The deal is largely seen as a template for other foreign companies that are eager to invest in the Canadian oil sector without triggering nationalistic concerns.
Mr. Chee's early experience as an project analyst at a Singapore bank taught him lessons that served him well in Canada. His job was to assess the viability of machinery purchased by business clients with banks loans. His insights earned him respect - and a seat on a number of company boards. Their struggles gave him a life-long appreciation of the importance of capital and the need to invest it efficiently.
When his new wife Margaret pushed to broaden their horizons, they chose to stake their future in North America's booming economy. Canada became their home because of its more relaxed immigration policies.
He landed a job in research at Ontario Hydro by answering a want ad. At the sprawling provincial power utility, he found a bureaucratic organization that raised hundreds of millions of dollars to expand operations with little attention to modern financial disciplines, such as measuring returns on invested capital.
Early efforts to analyze Ontario Hydro's capital programs met with resistance. A request to purchase a $180 Hewlett-Packard calculator was rejected as too costly (he bought it with his own money). He was forced to share a computer when writing software code to build programs that could assess liabilities and returns in the utility's capital program.
"When my time was up, the computer would go 'ding' and my manager would yell my time was up," he said.
When interest rates soared in the early 1980s, Mr. Chee's skills became increasingly in demand. He introduced basic policies to stagger bond maturities to control the flow of cash. And he imported new financial tools such as swaps and options to shield against volatile interest and currency rates. Ontario Hydro was one of the first Canadian companies to employ the derivatives that are now standard in most corporations.
His success earned him senior posts at Manulife Financial and then the University of Toronto, where, starting in 2000, he was placed in charge of operations ("everything from campus police to finance and parking"). He also took the reins in the mid-2000s of the university's endowment fund, leaving him with the task of overseeing a fund just as the bull market was running out of steam.
He decided to retire in early 2008 as the global meltdown was beginning. Although he is disappointed that the endowment fund took a heavy hit during the crisis, he says the charged political environment at the university "was good training for China."
Mr. Chee said he timed his retirement to coincide with the pending birth of his first grandchild, who was due in September, 2008. Those plans changed when he got a call in May, 2008, from Beijing. The caller was Gao Xiqing, a senior Chinese banking and regulatory official, who months earlier had been appointed vice-chairman and president of CIC.
The two men had never spoken before, but Mr. Gao had learned of Mr. Chee's reputation and wanted to hire him immediately as his adviser to help navigate investment pitches that were being thrown at a giant new fund born during a credit crunch.
"They were being bombarded with pitches," Mr. Chee said. "Everyone wanted to be in China. Everyone wanted a relationship with China and CIC was seen as a door in."
Everyone, that is, except Mr. Chee, who initially hesitated to join CIC in Beijing because of his new grandchild.
"I wanted to be here," he says, reaching into his pocket to pull out a photo of his beaming granddaughter, now 2.
The one-year-old CIC fund was willing to wait for the new grandfather. In October, 2008, Mr. Chee left his family behind and moved into temporary quarters in Beijing to help launch China's largest investment fund. In the end, the opportunity was just too difficult to turn down.
"Not many people get to be part of a $200-billion startup."
Lots of folks have pitched investment proposals at Felix Chee, but few understand what the sovereign fund is looking for. Some arrive with thick deal books stuffed with investment proposals "hoping that something will stick," he said. Others come with problems they want to solve with China Investment Corp.'s money.
So far, CIC has made only two major public investments in Canadian companies, Teck Resources Ltd. and Penn West Petroleum Ltd. Its biggest North American investments have been a $3-billion (U.S.) minority stake in Blackstone Group and a $5-billion purchase of a 9.9-per-cent stake in Morgan Stanley. Those U.S. investments ignited criticism in China that the fund was making a risky bet on troubled Wall Street. That opposition, Mr. Chee said, has put enormous pressure on CIC's managers.
Before you pay a visit to CIC's Toronto office, consider what Mr. Chee is looking for: "If I can check the following three boxes, there is a pretty good chance I am going to make an investment."
1. The investment should have the potential for a decent return.
2. There should be a China component to the transaction so that the deal provides some benefit to businesses or professionals back home. Teck fits this bill because it sells a share of its minerals to China.
3. The transaction should be structured in a way that enhances outsiders' perceptions of China.
Born and raised in Singapore, where his grandmother ran a girls' school. His family lived at the school for his first six years. Early memories include chasing windup toys down long hallways at the school.
Lives with his wife Margaret in Oakville, Ont. They have one adult daughter and a two-year-old granddaughter. Mr. Chee is 64 years old.
Son of an auto service shop owner, he has had a life-long passion for cars. In his spare time, he drives a limited edition BMW Z-series roadster, the same make featured in two James Bond movies. He has a cottage in the Kawartha Lakes region.
Bachelor of technology, industrial engineering, Loughborough University, England.
Master of Science, Imperial College, London.
MBA, York University, Toronto, Ontario.
1975-1993: Ontario Hydro, various positions, culminating in senior vice-president, financial.
1993-2001: Treasurer and chief investment officer, Manulife Financial Corp.
2001-2008: Various posts including chief financial officer, University of Toronto, and CEO of its asset management arm, UTAM.
2008-2011: Adviser to China Investment Corp. president.
Since 2011: Chief representative of CIC Toronto office.
|PWT-T Penn West Petroleum||9.05||
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|TCK.B-T Teck Resources||24.93||
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