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Canada’s $330 Billion Fund to Scale Back Direct PE Investments

(Bloomberg) -- Canadian pension manager Caisse de Depot et Placement du Quebec will lean more on partners and third-party managers when investing in private equity, but remain primarily a direct investor.

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Once a fund attains scale, “you reach a certain level where you need to actually partner up with a few selected partners to make sure you’re able to actually manage that volume,” Chief Executive Officer Charles Emond said in an interview.

Emond said CDPQ will strengthen relationships with its “best partners” and will sometimes co-invest with external managers.

Private equity comprises 19% of CDPQ’s total portfolio, which is near where clients want the allocation to stay, Emond said.

The pension fund manager wants to be a net seller every year so the asset class doesn’t outgrow the firm, he added: “It’s just a matter of balancing this out because we’re not going to hire hundreds and hundreds of people.”

CDPQ, which manages C$473 billion ($330 billion) in net assets as of Dec. 31, plans to implement a similar strategy for its credit and real estate portfolios.

The pension fund manager ultimately aims to have more liquidity, Emond said.

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