The Caisse de dépôt et placement du Québec says it’s ready to pump up to $4-billion into Quebec businesses affected by the COVID-19 pandemic.
The giant Quebec institutional investor, which had $340-billion in assets under management as of Dec. 31, will offer a range of liquidity options to companies based in the province including loans, lines of credit, and buying preferred and common equity.
The move was motivated by a desire to support businesses struggling during the pandemic, said CEO Charles Emond, adding it was “essential for [the Caisse] to join the collective effort” to help the economy.
To qualify, companies must require a minimum of $5-million of financial aid, have a promising growth plan coming out of the pandemic – and show they were profitable before the crisis.
However, the Caisse will also consider financing large, fast-growing but unprofitable technology companies – for example, Montreal-based retail and restaurant point-of-sale software provider Lightspeed POS Inc. – as long as they are well-positioned to keep expanding, Mr. Emond said.
“Obviously, for sure we’ll be supporting those companies," he said in an interview, adding “it was essential for [the Caisse] to to join the collective effort" to help the economy during the pandemic.
The money isn’t a bailout; the Caisse expects the same returns it typically makes.
“This isn’t a write-off, far from it,” Mr. Emond said. “We’re not moving away from the objective which is first and foremost achieving returns for our depositors. Otherwise, over all, net-net we wouldn’t be helping out and having a positive impact.”
The Caisse, which manages money on behalf of Quebec public-sector pension and insurance funds, has a dual mission set out by the provincial government to both earn investment returns and support the Quebec economy. It has been criticized in the past by some Quebeckers for not investing enough at home.
"The mindset is that if a company has the right management team, a bright future, a promising business model and the notion of having a permanent business, more than one criteria will be considered.”
The funds committed under the COVID financing plan are in line with what the Caisse typically invests in Quebec in a year. In 2019 it invested or committed $3.3-billion in Quebec based companies, and $7.3-billion the year before. The Caisse had $66.7-billion in total assets in Quebec at the end of 2019.
The financing pledge follows supports announced in recent weeks by governments in Ottawa and Quebec by to businesses and workers affssected by the shutdown of vast parts of the economy.
The Caisse also said it will donate $300,000 to five philanthropic and community organizations, including the Canadian Red Cross and the emergency fund of Montreal’s United Way. In addition, the Caisse said it would freeze the salaries of its leaders.
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