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One of the architects of the Canada Pension Plan's investing strategy is aiming to replicate his success — for Qatar – Financial Post

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Don Raymond, one of the architects of the investment strategy behind the Canada Pension Plan, has been recruited to build similar investment capabilities at the Qatar Investment Authority, a sovereign wealth fund with an estimated US$328 billion in assets whose holdings have included stakes in London’s Heathrow airport and New York’s Plaza Hotel.

Raymond told the Financial Post he was approached by a recruiting firm in London and found the opportunity too hard to pass up.

“They knew of my experience in helping formulate the overall investment strategy at CPPIB and my final role as head of total portfolio management and chief investment strategist,” he said. “To be able to do it again at a national level was very appealing.”

The QIA fund, which was established in 2005 with a mandate to invest and manage Qatar’s reserves and help develop a competitive and diversified economy, has expanded its holdings in recent years in the United States, United Kingdom and Asia, with a growing portfolio of assets in sectors including real estate, financial services and technology.

Raymond spent over 12 years at CPPIB during a crucial time in the pension management organization’s development as it shifted from largely passive investments to active management, developing in-house investment expertise along the way. He was the first employee in the Canadian pension’s public market investments department, overseeing a portfolio of $11 billion in passively managed funds as it grew to $100 billion managed by more than 130 employees using five distinct investment strategies.

In his final role as chief investment strategist, Raymond chaired CPPIB’s investment planning committee and was responsible for overseeing portfolio design and management for the fast-growing capital pool. He also helped develop the United Nations’ Principles of Responsible Investing, which were adopted by the Canadian pension in 2005.

Raymond left CPPIB in 2014. Since then, he had been working at Alignvest Management Corp., an alternative investment management firm with clients including pension plans, foundations and ultra-high net worth family offices.

“I ultimately decided that I had one more major operating role in me at an ‘asset owner’,” the 58-year-old told the Post, adding that he will be leading the overall investment strategy at QIA.

He said he found the vision of the sovereign wealth fund’s chief executive Mansoor bin Ebrahim Al Mahmoud — reportedly a seasoned dealmaker who aspired to steer the fund towards more active investing — to be “bold” and compelling.

“I was offered a high-impact role,” Raymond explained.

“QIA was looking to build capabilities similar to what I had helped build at CPPIB, which was attractive both for them and for me.”

In an interview this month with Bloomberg TV in Davos, Switzerland, during the World Economic Forum, Al Mahmoud said the sovereign wealth fund will be shifting towards greener assets, with no additional investments in coal and no significant expansion of its oil and gas holdings.

“Since most of the country’s income comes from hydrocarbons, we’re not looking to add to that exposure,” Raymond told the Post.

The sovereign wealth fund’s CEO has also said publicly that QIA is looking to increase investments in the United States, with Reuters reporting in July that the target is to hit US$45 billion over the next two years, up from around US$30 billion.

QIA is the ninth-largest sovereign wealth fund in the world by total assets, which stand at US$328 billion, according to the Sovereign Wealth Fund Institute.

Raymond, who moved from Toronto to Qatar’s capital city Doha in the new year, said the location of the new job appealed to his “adventurous streak,” though, as tensions between the United States and Iran escalated this month, he added that he “could have picked a better time to relocate to the Middle East from a regional security perspective.”

His first job out of university in the 1980s was also far from home — in a desert in northwest China — before he returned to Canada for graduate school, earned a PhD, and turned his focus to finance at Burns Fry Ltd. and Goldman Sachs.

“I was a wireline/oilfield engineer and helped open up a new (oilfield services provider) Schlumberger base in the Gobi Desert, not too far from the Kazakhstan border,” recalled Raymond, who also trained as a pilot during a two-year stint in the Canadian military after high school.

He said he doesn’t know how long he’ll spend at Qatar’s sovereign wealth fund, but expects it will take several years to build out a team, embed new processes, and execute on that strategy. And while he hopes to have “an enduring impact” on the Qatari institution, he acknowledged that much will depend on the progress he makes.

“Job security is entirely dependent on performance, just like at Alignvest and CPPIB, as one would expect from a world-class investment organization,” he said.

• Email: bshecter@nationalpost.com | Twitter:

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More China coal investments overseas cancelled than commissioned since 2017

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More China-invested overseas coal-fired power capacity was cancelled than commissioned since 2017, research showed on Wednesday, highlighting the obstacles facing the industry as countries work to reduce carbon emissions.

The Centre for Research on Energy and Clean Air (CREA) said that the amount of capacity shelved or cancelled since 2017 was 4.5 times higher than the amount that went into construction over the period.

Coal-fired power is one of the biggest sources of climate-warming carbon dioxide emissions, and the wave of cancellations also reflects rising concerns about the sector’s long-term economic competitiveness.

Since 2016, the top 10 banks involved in global coal financing were all Chinese, and around 12% of all coal plants operating outside of China can be linked to Chinese banks, utilities, equipment manufacturers and construction firms, CREA said.

But although 80 gigawatts of China-backed capacity is still in the pipeline, many of the projects could face further setbacks as public opposition rises and financing becomes more difficult, it added.

China is currently drawing up policies that it says will allow it to bring greenhouse gas emissions to a peak by 2030 and to become carbon-neutral by 2060.

But it was responsible for more than half the world’s coal-fired power generation last year, and it will not start to cut coal consumption until 2026, President Xi Jinping said in April.

Environmental groups have called on China to stop financing coal-fired power entirely and to use the funds to invest in cleaner forms of energy, and there are already signs that it is cutting back on coal investments both at home and abroad.

Following rule changes implemented by the central bank earlier this year, “clean coal” is no longer eligible for green financing.

Industrial and Commercial Bank of China, the world’s biggest bank by assets and a major source of global coal financing, is also drawing up a “road map” to pull out of the sector, its chief economist Zhou Yueqiu said at the end of May.

 

(Reporting by David Stanway; Editing by Kenneth Maxwell)

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Bank of Montreal CEO sees growth in U.S. share of earnings

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Bank of Montreal expects its earnings contribution from the U.S. to keep growing, even without any mergers and acquisitions, driven by a much smaller market share than at home and nearly C$1 trillion ($823.38 billion) of assets, Chief Executive Officer Darryl White said on Monday.

“We do think we have plenty of scale,” and the ability to compete with both banks of similar as well as smaller size, White said at a Morgan Stanley conference, adding that the bank’s U.S. market share is between 1% and 5% based on the business line, versus 10% to 35% in Canada. “And we do it off the scale of our global balance sheet of C$950 billion.”

($1 = 1.2145 Canadian dollars)

 

(Reporting by Nichola Saminather; Editing by Leslie Adler)

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GameStop falls 27% on potential share sale

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Shares of GameStop Corp lost more than a quarter of their value on Thursday and other so-called meme stocks also declined in a sell-off that hit a broad range of names favored by retail investors.

The video game retailer’s shares closed down 27.16% at $220.39, their biggest one-day percentage loss in 11 weeks. The drop came a day after GameStop said in a quarterly report that it may sell up to 5 million new shares, sparking concerns of potential dilution for existing shareholders.

“The threat of dilution from the five million-share sale is the dagger in the hearts of GameStop shareholders,” said Jake Dollarhide, chief executive officer of Longbow Asset Management. “The meme trade is not working today, so logic for at least one day has returned.”

Soaring rallies in the shares of GameStop and AMC Entertainment Holdings over the past month have helped reinvigorate the meme stock frenzy that began earlier this year and fueled big moves in a fresh crop of names popular with investors on forums such as Reddit’s WallStreetBets.

Many of those names traded lower on Thursday, with shares of Clover Health Investments Corp down 15.2%, burger chain Wendy’s falling 3.1% and prison operator Geo Group Inc, one of the more recently minted meme stocks, down nearly 20% after surging more than 38% on Wednesday. AMC shares were off more than 13%.

Worries that other companies could leverage recent stock price gains by announcing share sales may be rippling out to the broader meme stock universe, said Jack Ablin, chief investment officer at Cresset Capital.

AMC last week took advantage of a 400% surge in its share price since mid-May to announce a pair of stock offerings.

“It appears that other companies, like GameStop, are hoping to follow AMC’s lead by issuing shares and otherwise profit from the meme stocks run-up,” Ablin said. “Investors are taking a dim view of that strategy.”

Wedbush Securities on Thursday raised its price target on GameStop to $50, from $39. GameStop will likely sell all 5 million new shares but that amount only represents a “modest” dilution of 7%, Wedbush analysts wrote.

GameStop on Wednesday reported stronger-than-expected earnings, and named the former head of Amazon.com Inc’s Australian business as its chief executive officer.

GameStop’s shares rallied more than 1,600% in January when a surge of buying forced bearish investors to unwind their bets in a phenomenon known as a short squeeze.

The company on Wednesday said the U.S. Securities and Exchange Commission had requested documents and information related to an investigation into that trading.

In the past two weeks, the so-called “meme stocks” have received $1.27 billion of retail inflows, Vanda Research said on Wednesday, matching their January peak.

 

(Reporting by Aaron Saldanha and Sagarika Jaisinghani in Bengaluru and Sinead Carew in New York; Additional reporting by Ira Iosebashvili; Editing by Sriraj Kalluvila, Shounak Dasgupta, Jonathan Oatis and Nick Zieminski)

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