Roland Lescure has been Chief Investment Officer of the Caisse de Dépôt et Placement du Québec (which has $152 billion AUM) for the past 18 months. For those of you that don’t know the recent history of La Caisse, Lescure was brought in after the Quebec fund lost $40 billion in 2008 and fired 55 investment professionals. It was carnage. And Lescure’s appointment was a sign that the fund would (from now on) be taking risk management, governance and operations much more seriously. Given all of this, I was quite interested to come across a neat little interview with Mr. Lescure in aiCIO’s Fall Magazine. Specifically, it was quite interesting that he touched on many of the recurring themes from this blog. So, without further ado, here are some deep thoughts by Roland Lescure!
On the benefits of concentration: “Diversification is not what it used to be. It is no longer achieved by having as many investments as you can in many different asset classes and geographies. We are in a time when diversification is an illusion…concentration, it seems, is no longer the enemy…At $150 billion dollars, if we have one investment, we are very risky. If we have 3,000 investments, we are pretty risky too—because, as a result, we are not the master of the depths of every single investment…The ability to understand fully, from top to bottom, the investments you make is the key to success because it is going to help you manage your risk better. This strategy has consequences on the way we see our investments.”
On the benefits of in-house skill: “We strongly believe in in-house research, the ability to know the management of the companies we invest in, their business owners, their financial statements, and their operations inside and out…We have a big real estate group and one of our main advantages that has led us to a fantastic return in this asset class is that we manage operations.”
On the benefits of collaboration: “When we decided a few years ago to go and do things a bit away from our comfort zone, we established a local partnership in order to make sure we got the proper contacts, knowledge, and abilities to understand the investments we were going to make while also bringing our own operational capabilities expertise to the table…More than ever, the strength of your partnerships in private equity, especially in emerging markets, is critical.”
On the benefits of illiquid assets: “Today, we have a little more than $16 billion in private equity and another $5 billion in infrastructure. We are definitely willing to pursue it further; it has been providing us with great returns because we have been investing in the right projects and with the right partners.”