Caisse de dépôt to boost emerging markets exposure

The Caisse de dépôt et placement du Québec is ramping up its emerging markets investment focus across asset classes including private equity after taking a hiatus for several years, according to Rashad Kaldany, executive vice-president in emerging markets at the institution.

Kaldany gave an update of the program at the International Finance Corp’s 16th Annual Global Private Equity Conference (in association with the Emerging Markets Private Equity Association) last week. The Caisse’s private equity portfolio had about $20.2 billion in net assets as of Dec. 31, 2013, according to its website.

The Caisse has “re-oriented” its emerging markets strategy to focus on Latin America and Southeast Asia, Kaldany said. The institution will take “larger stakes” in fewer general partners for “more strategic engagement,” he said. The institution likely will invest with one or two GPs in each of Latin America and Asia in the next 12 months, Kaldany clarified for peHUB in a follow-up email.

The institution will focus primarily on Southeast Asia and Latin America for the next 18 to 24 months, but could invest outside those regions during that time period. Over the next four years, the institution will likely expand its focus to other developing markets, Kaldany said.

The Caisse had been a “pioneer” in emerging markets in the 1990s, but backed away from the strategy in 2002, which was “just the wrong time, we missed some prime vintage years,” Kaldany said. “It was a strategic decision made at the time to concentrate more on developed markets,” he said in the follow-up email.

Since the mid-to-late 2000s, the Caisse has started to build exposure in emerging markets, he said.

Performance of the Caisse’s emerging markets investments has been mixed, Kaldany said, though he did not provide details of individual fund performance. “This is due to a number of factors, including the risk of devaluations, as well as possibly in some markets some GPs investing too much at the peak,” Kaldany further explained in the follow-up email.

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