The Quebec government has named former Bank of Nova Scotia investment banker Charles Émond as chief executive of the Caisse de dépôt et placement du Québec, putting its faith in a fresh-faced deal maker amid more challenging times ahead.
The appointment of Mr. Émond, 47, was confirmed by the Caisse on Wednesday after a meeting of Quebec Premier François Legault’s cabinet. He replaces Michael Sabia, who is slated to leave at the end of this week after a decade-long tenure.
Canada’s pension funds have performed strongly through this bull market and Mr. Émond will be under pressure to maintain the 9.9-per-cent annual average return Quebeckers have gotten used to from the Caisse under his predecessor despite increasing economic volatility. He has the added provincial government-mandated obligation to promote economic development, something the pension fund has sometimes struggled with over the years.
“The next decade … won’t have the same tailwinds that we’ve benefited from,” Mr. Émond said in an interview Wednesday. “For a similar level of return, you’ll have to deploy more efforts to actually get there."
That means adding people who have complementary expertise to the Caisse’s current teams, he said. And it means consolidating its existing international footprint instead of expanding into new countries.
“[Michael Sabia and I] have different personalities, but the values are the same,” Mr. Émond said. “I intend on continuing building from the legacy that Michael has built.”
The Caisse had net assets of $326.7-billion at the end of June, 2019. Roughly two-thirds of its geographic exposure is outside Canada.
Mr. Émond beat out other candidates that included Macky Tall, a Caisse veteran who leads the pension fund’s infrastructure investments, and André Bourbonnais, a former CEO of the federal government’s pension fund manager, PSP Investments, who now works for U.S. investment management giant BlackRock Inc. Mr. Tall was the preferred candidate of the Caisse’s internal selection committee, Montreal’s La Presse newspaper reported, but the Quebec government had the final say.
Asked by reporters Wednesday morning why he chose Mr. Émond, Premier Legault said all the candidates were “exceptional," but noted Mr. Émond’s youth, calling him a “brilliant” executive. The Premier has shown a penchant for placing his faith in younger leaders. His cabinet is full of ministers with substantial business and public-service credentials, but hardly any experience running ministries.
“Mr. Émond is a generalist. His experience is global. And that’s key for this organization,” said Michel Nadeau, a former Caisse executive who now works as executive director of the Institute for Governance of Private and Public Organizations.
Bankers who worked closely with Mr. Émond during his tenure at Scotiabank emphasized his capable mind, but also his versatility at working with clients across a range of sectors and asset classes. He’s said to be decisive and have a strong sense of humour.
Caisse chairman Robert Tessier praised Mr. Émond for his “rich combination” of experience and abilities, saying he has a deep understanding of Quebec’s business community. “A seasoned negotiator, Charles has demonstrated throughout his career that he can successfully conclude complex and major projects by mobilizing his teams and managing stakeholder relationships with a long-term perspective," Mr. Tessier said.
Mr. Émond was recruited to the Caisse a year ago after an 18-year career at Scotiabank, where he was a rising star who notably piloted the lender’s global investment banking and Canadian corporate banking businesses. A chartered accountant and business valuator, he steered Scotiabank’s international investment activities on four continents, planting its flag firmly in South America where the bank quickly became one of the main players in corporate finance and mergers and acquisitions.
He made his name running the bank’s Quebec business from Montreal. He then moved to Toronto, where he was named co-head of global investment banking in 2015.
He worked closely on key mergers and acquisitions files, both for clients and for Scotiabank. He was instrumental in Scotiabank’s two-year courtship of investment firm Jarislowsky Fraser Ltd., which the bank acquired in 2018 for $950-million.
“It was done with a very small team. It was basically Charles and I and Mr. Jarislowsky and a couple of his colleagues," Brian Porter, Scotiabank’s chief executive, said in an interview last year.
“He has worked very hard in his career to achieve what he has to date, but his intellect, gravitas and expertise is what makes him rise above,” said Camilla Sutton, CEO of Women in Capital Markets and former global head of foreign exchange at Scotiabank.
At the Caisse, Mr. Émond was initially in charge of the pension fund’s Quebec investment strategy and global strategic planning. But he was given added responsibility for all of its private-equity activities when another senior executive unexpectedly left the organization in November.
The Caisse has a dual mandate of maximizing returns for depositors and promoting Quebec’s economic development, the only Canadian pension fund with such a directive. In practice, that means its CEO needs to have a heightened political sensibility given their actions are scrutinized by the government, the population and the media.
Mr. Sabia, 66, led the Caisse through four changes of government in Quebec City, navigating those politically charged waters by defending the Caisse’s decision-making independence while boosting investments in local companies and real estate. He has always insisted that the best way to protect Quebec companies is by making them world beaters, a philosophy Mr. Émond said he shares.
Mr. Émond will face several immediate challenges on the corporate front. Chief among them: What to do, if anything, to help Bombardier Inc.
The Caisse owns a roughly 30-per-cent stake in Bombardier’s rail business, a US$1.5-billion investment it made in 2016 that “saved the company,” Mr. Sabia has said. Bombardier is now searching for ways to generate cash to pay down debt, an effort that might include selling the rail business outright.