Cited for unusal efficacy were the ETIs of Colorado led by the sixth largest pension supplier in the United States, the Public Employees' Retirement Association (PERA) of Colorado. In combination with two other state-based pension funds (each of which have committed 3 percent of assets to this class), PERA has been credited for leveraging an inordinately large per capita share of venture capital supply to this mid-sized state economy. Potent ETI models were also found in New York, Pennsylvania and Wisconsin. Moreover, the Small Business Administration report concluded that the impact of ETIs and other initiatives for strategically re- allocating assets was greatest in small and disadvantaged state economies where public sector pension funds proved a driving force.Endnote 53
Along with achieving benchmark financial returns, the raison d'etre of the Caisse de dépôt et placement has been to invest with reference to Quebec economic needs. If allocation of assets is the measure, this mandate has been amply fulfilled - in 1997 over 80 percent of Caisse investing was situated in Quebec. In recent years, this effort has been broadened to include local economic development, the primary instrument of which is the Accés Capital network of regional pools.
Actually, this initiative was preceded by earlier Caisse de dépôt experience in the Sociétés régionales d'investissement in syndication with three other financial institutions and with government support. Originally intended as a network of about a half dozen regional pools, Accés Capital was founded in 1996 as an independent arm of the Caisse Private Investments Group and, today, comprises eleven pools capitalized at a total of $100 million.
With respect to investment, the network has multiple roles. First, Accés Capital pools receive local business plans, conduct due diligence and offer direct SME financing within a deal range of $50,000 to $750,000. Much of this transacting is carried out using term loans, a function the Caisse de dépôt has undertaken due to its increasing capacity for directing in-house credit analysis, account management and risk control. In the main, borrowers are well-established SMEs with roots in the traditional manufacturing and service industries of regional economies. Venture financing is also extended (often, in combination with debt), especially where new business formations with growth prospects have emerged from sponsoring incubators and other SME development programs (see Caisse de dépot: Ways and Means). In larger projects (up to $1 million), regional pools co-invest with Capital CDPQ. Accés Capital also acts as a link between SMEs in Quebec communities and the full line of products and services made available by the Caisse.
Given its short history, characterized by organizational start-up and initial investing, most of Accés Capital's story has yet to be told. This said, at the end of 1997 investments totalled seventeen at an aggregate portfolio value of $13 million. Pools are currently found in twelve regions: Abitibi-Témiscaminque, Bas-St.Laurent, Centre du Québec, Estrie, Gaspésie-Les-Iles, Laval-Laurentides-Lanaudiére, Montérégie, Montréal, Outaouais-Hull, Québec, Québec-Beauce-Appalaches and Saguenay-Lac St-Jean. Additions to the network and network resources will be contemplated over time.
The Caisse approach has been emulated elsewhere, as seen in the strategy of the New Brunswick Investment Management Corporation (IMC) to apportion 2 percent of total public sector pension assets, or over $100 million, to privately- placed debt and equity. This money goes to backing high-yield co-investment and syndication projects that may incidentally contribute to economic development, diversification and job creation in communities across the province. Various investment targets include local SMEs in traditional industries and infrastructure. A current project involves up-grading of the highway system in the Fredericton to Moncton corridor. The newly-incepted strategy of the New Brunswick IMC suggests a potential model for pension participation located elsewhere in Atlantic Canada.
Sources: Caisse de dépot, Brochures and 1997 Operations Report, 1998; CLMPC interviews