news newsQuebec and Caisse join union

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Quebec and Caisse join union fund to create $825-million technology investment fund



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By Ross Marowits, The Canadian Press


MONTREAL - The Quebec government is partnering with several key investors to launch a technology fund with an $825-million investment to help start-up companies develop and create jobs in the province.

The Caisse de depot et placement pension fund manager and the Quebec Federation of Labour's Solidarity Fund will each contribute $250 million to the Teralys Capital Fund.

The government will add $200 million and seek $125 million from institutional and private investors.

The Teralys Capital Fund will invest in about 15 large funds that invest in companies involved in life sciences, information technology and clean energy technology, the financing partners said Monday.

"We are creating with this program a major presence based in Quebec in the venture capital markets in North America, and I think beyond that, in the world overall," Michael Sabia said in his first major announcement since becoming Caisse CEO in March.

Sabia said Canada's largest pension fund manager would expect over the long term to generate a 15 to 20 per cent return.

The first phase of the venture capital strategy was put in place in 2004.

Sabia, the former CEO of BCE Inc., took over the Caisse earlier this spring after the pension fund lost tens of billions of dollars in the last year as the stock market plunged and weak results from other investments ate into the value of its pension assets.

The technology fund coincidentally comes at a crucial time for entrepreneurs with new ideas but who are struggling to obtain financing in the tight credit conditions, he said.

Quebec Finance Minister Raymond Bachand said "this partnership meets our objective of mobilizing to help Quebec companies set themselves apart and start preparing right away for a strong, sustainable recovery."

"Today's the day that the venture capital industry in Quebec has come into its maturity," he told reporters.

"With its size, the fund will provide a powerful economic lever for our technology companies and will help ensure the development of our leading-edge sectors, in Quebec and elsewhere."

Bachand said he plans to meet again Monday with Sabia who will testify before a legislative committee studying the Caisse's poor performance last year.

"I might have discussions on global policy, macroeconomic issues but I'm certainly not going to do like the PQ and try to dictate which stock they should invest in," the minister said in a scrum after the event.

The Teralys fund will be overseen by Jacques Bernier, recently a strategic adviser to the union investment agency. He said the fund expects to itself invest in 15 technology funds with at least $150 million in assets.

Quebec has helped to create 18 new funds with capitalization approaching $2 billion.

There are no limits on how much money will be allocated to each technology sector, but about half of the funds are expected to go to information technology with the rest divided between life sciences and clean technology.

About 75 per cent of the investment is expected to be earmarked to Quebec funds, with 25 per cent capital going to foreign companies that are active in Quebec..