Global Investor Presentation - CDPQ · 2020-05-07 · 2 Global Investor Presentation CDPQ at a glance Notes All amounts in this presentation are as at December 31, 2019 unless otherwise

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Global Investor Presentation

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http://cdpq.com/en

Global Investor Presentation1

> This presentation and the accompanying oral presentation contain forward-looking statements within the meaning of applicable securities

legislation. Forward-looking statements are typically identified by words such as “projected,” “estimate,” “may,” “anticipate,” “believe,”

“expect,” “plan,” “intend,” “could” or similar words suggesting future outcomes or statements regarding an outlook (and the negative form

thereof). All statements other than statements of historical fact contained in these slides are forward-looking statements.

> Forward-looking statements involve numerous assumptions, risks and uncertainties. A variety of factors, many of which are beyond the

control of Caisse de dépôt et placement du Québec (“CDPQ”), may cause actual results to differ materially from the expectations

expressed in its forward-looking statements. These factors include, but are not limited to, risks related to financial markets and economic

conditions in Canada, the United States and internationally, changes in standards, laws and regulations, risks related to defaults by

financial institutions, risks related to financial instruments, fluctuations in interest rate levels, increased competition for assets, fluctuations

in investment returns, foreign exchange rate fluctuations, adverse changes in the credit markets, the risk of damage to CDPQ’s reputation,

CDPQ’s ability to access the capital markets for debt financing, changes in the real estate and infrastructure markets in Canada, the

United States and elsewhere, and risks more generally associated with the markets and CDPQ’s portfolios of investments.

> CDPQ does not undertake to update any forward-looking statement, whether written or oral, that may be made from time to time by or on

its behalf.

> No information presented in this presentation and the accompanying oral presentation as of a date more recent than December 31, 2019

has been audited and only the consolidated financial statements of CDPQ as at December 31, 2019 and for the year then ended have

been audited.

> The information on, or accessible through, our website or any of the other websites or links to websites referred to in this presentation is

not part of or incorporated by reference into this presentation.

> Under no circumstances should the information contained herein be considered an offer to sell or a solicitation of an offer to buy any

security of CDPQ, CDP Financial Inc. (“CDP Financial”) or any of their respective affiliates in the United States or in any other jurisdiction

where such offer or solicitation would be unlawful, and such information does not constitute an offer to sell or a solicitation of an offer to

buy or an advertisement in respect of securities in any province or territory of Canada. Any offer to sell or solicitation of an offer to buy

securities of CDPQ, CDP Financial or their respective affiliates in the United States may not be made absent registration under the

Securities Act of 1933, as amended (the "Securities Act"), or an exemption from registration under the Securities Act. Any offer of

securities of CDPQ, CDP Financial or their respective affiliates will be made pursuant to a private offering memorandum.

Cautionary statements


CDPQ at a glance

Notes

All amounts in this presentation are as at December 31, 2019 unless otherwise indicated.

In this presentation, we use the USD/CAD exchange rate as at December 31, 2019: 1.2968

USD 262.3 BCAD 340.1 B

NET ASSETS

AS AT DECEMBER 31, 2019

40+PUBLIC AND PARAPUBLIC

DEPOSITORS, MAINLY

RETIREMENT FUNDS

AND INSURANCE PLANS

One of the largestPUBLIC PENSION ASSET

MANAGERS IN CANADA3

1965CREATION OF CAISSE DE DÉPÔT

ET PLACEMENT DU QUÉBEC

AAASINCE ITS FIRST ISSUANCE IN

2003 (DBRS, FITCH1, MOODY’S

AND S&P)2

66%EXPOSURE OUTSIDE CANADA

1,285 EMPLOYEES

12 OFFICES WORLDWIDE

1. Fitch began providing a rating as of February 2019.

2. Ratings are not a recommendation to buy, sell or hold securities and may be subjectto revision or withdrawal at any time.

3. Based on net assets under management.


Our mission

CDPQ was created in 1965 by an Act

of the National Assembly of Québec to

manage assets for the newly created

Québec Pension Plan (mandatory for

all Canadians working in Québec)

CDPQ is not responsible

for its depositors’ liabilities

(e.g. pension liabilities)

CDPQ is operationally and

financially independent from the

Government of Québec


> More than 98%1 of CDPQ’s net assets

come from exclusive legislated mandates

• These depositors are governed by their own

laws and regulations requiring them to invest

their funds with CDPQ

> Stable legal and legislative framework

> 41 depositors:

• Pension plans for provincial government

employees account for more than 50% of net

assets2 (over 550,000 contributors, 325,000

beneficiaries)

• Québec Pension Plan is a compulsory public

insurance plan to provide workers with basic

financial protection in the event of retirement,

death or disability (over 4 million contributors,

2 million beneficiaries)

Our depositors: an exceptionally stable asset base

1. As at December 31, 2019. Please refer to the appendix for links to relevant legal documents, including the laws pertaining to CDPQ and some of its depositors.

2. Includes the following plans: Retirement Plans Sinking Fund, Government and Public Employees Retirement Plan, Pension Plan of Management Personnel.

Québec Pension Plan

24%

Other public retirement funds

(ex.: municipalities)

10%

Insurance plans

10%Other

3%

Provincial government employees 2

53%

CAD 340.1 B


> Independence from Government, established

by legislation1,2

• The Government of Québec does not intervene in any

aspect of CDPQ’s investment decisions, operations or

finances, nor does it guarantee CDPQ’s debt

> Independent Board of Directors2

• At least 2/3 of members, including the Chair, must be

independent

• Strong fiduciary duty, including appointing the CEO,

establishing risk management policies, approving

CDPQ’s strategic plan and approving investment

policies

> Stable legislation and legal framework2

Governance

…governance came upagain and again asperhaps the single mostimportant factor in thesuccess of the Canadianmodel of pension funds.

World Bank Group3

“

”

1. “It acts with full independence in its administrative management and in the management of its investments…” Act respecting the Caisse de dépôt et placement du Québec (chapter C-2).

2. Please refer to appendix for link to legal documentation, including the law and regulations pertaining to CDPQ and some of its depositors.

3. ”The Evolution of the Canadian Pension Model, Practical Lessons for Building World-class Pension Organizations.” World Bank Group. November 2017.


Providing value to our depositors to meet their long-term needs

Depositors and CDPQ’s portfolio

Advisory services to assist

our depositors

41separate

depositors

set their individuallong-term allocation targets

which translates into allocations among

11actively

managed specialized portfolios

total portfolio allocation and overlay strategies

CDPQ’s strategic

orientations

CDPQ’s

value added

Depositors’

orientations$$

Investment Portfolio


Key orientations

Build on in-house expertise to

create our own opportunities

Focus on quality assets rooted

in the real economy

Continue the portfolio’s

globalization through partnerships

Invest for the long term with a focus on quality, resilient assets

Continued focus on infrastructure, private

equity, real estate and private credit

Strategic partnerships and a disciplined

approach in key emerging markets

Focus on absolute-return management and

on the fundamental value of companies

Act as a long-term and active partner to

companies

Continue building on our comparative

advantage in our local marketTake action with a climate change

strategy Integrate carbon-reduction targets into all

investment decisions


Stewardship investing

An active leadership to generate sustainable growth

Governance

ESG analysis, dialogue with companies and exercise of voting rights

Climate change strategy

One of the first institutional investors to set carbon footprint targets across

all asset classes (2017)

• 25% reduction in the overall portfolio’s carbon intensity1 between 2017 and

2025

• USD 25 B in low-carbon assets by 2020 (enhanced target)

• Targeting a carbon-neutral portfolio for 2050

Diversity and inclusion

Initiatives to increase diversity and inclusion to execute our priorities

1 Total portfolio’s CO2 emissions (tCO2) divided by total assets ($).

Net-Zero Asset Owner Alliance

9.1% 7.6% 9.3% 4.2%


Solid results, consistent asset growth

8.1%Five-year annualized

return1

Cumulative net asset growth

CAD 11.0 BFive-year value-added

over benchmark portfolio

CAD 106.0 BFive-year net investment

results

106.02

Net

returns1: 10.4%

1. Weighted average return on depositors’ funds.

2. From December 2014 to December 2019.

As at December 31, 2019

CAD

billions

8.22

COVID-19

The COVID-19 crisis continues to impact the global markets and CDPQ. CDPQ

continues to monitor and assess the impact of this crisis. It has built a diversified

portfolio and maintains a sizeable reserve of high-quality liquid assets. CDPQ follows

very closely any developments and anticipates it will maintain its ability to fulfil its

mandate and any obligation towards all of its creditors.


3 main asset classes, 11 specialized portfolios

> Close to 90% of all our investments managed in-house

> World-class investment platforms with strategic partnerships across the globe

Investment offering

1. Preqin, 2017.

2. Includes the following Specialized portfolios : Short term investments, Long-term bonds and Real return bonds.

3. IPE Real Assets Magazine, 2018, as at December 31, 2018.

4. Preqin, 2018.

EQUITIES

USD 129 billion (49%)

Public Equity (34%)

> Focus on absolute return:

active quality-based approach

Private Equity (15%)

> Cutting-edge expertise: around

75% of direct investments

> 45 years experience

> TOP 10 investor in the world1

FIXED INCOME


Credit (20 %)

> Corporate and sovereign credit in

developed and growth markets

> Commercial real estate debt

> Private debt, project finance and

specialty finance

Rates and other2 (10%)

> High-quality liquid government

securities

REAL ASSETS


Real Estate (12%)

> Ivanhoe Cambridge: TOP 10 investor

in the world3

> Holds interests in more than 1,000

buildings in key cities

> Develops, invests and operates

Infrastructure (8%)

> TOP 10 investor in the world4

> Over 20 years of investments

0 $

25 $

50 $

75 $

100 $

Fixed Income Public equity Private equity Real estate Infrastructure

Dec-14 Dec-19



> Increased asset diversification, a result of our long-term investment approach

• High quality assets creating long-term value, irrespective of market volatility

> Substantial liquidity, minimizing liquidity risk and providing flexibility

• Including more than USD 36 billion of cash and high-quality and liquid government securities

Breakdown by asset class

Fixed Income(30%)

Public Equity(34%)

Private Equity (15%)

Real Estate (12%)

Infrastructure(8%) Other (1%)

262 G$ US

USD B

Dec. 2019 vs. Dec. 2014*

Total net asset growth: + 51%

Note

Totals may vary due to rounding.

Amounts as at Dec. 31, 2014 and as at December 31, 2019 are both converted to USD using the exchange rate as at December 31, 2019 (1.2968).

+ 24%

+ 37%

+ 124%

+ 73%+ 175%


> Substantial increase in international exposure since 2014

• From 47% to 66% of overall portfolio

> Globalization is a key part of CDPQ’s strategic investment orientations

• Building a diversified and resilient portfolio with rigorous selection of international investments

Geographic exposure as at December 31, 2019

Note

Totals may vary due to rounding.

CDPQ’s priority growth markets include, but are not limited to, India, Brazil, Mexico, Colombia and China.

*

64%

53%

34%

17%

22%

33%

11%

14%

14%

4%

7%

14%

3%

5%

5%

2009

2014

2019

Senior Debt Issuance Program


Why issue debt?

> Optimizing portfolio construction (better risk taking)

> More flexibility in deploying our long-term strategy across asset classes

> Increased efficiency in liquidity management

Our approach

> Multicurrency senior debt program (144A / Reg S) launched in 2019

> Debt issued by CDP Financial, a direct wholly owned subsidiary of CDPQ

> Fully and unconditionally guaranteed by CDPQ's net assets

> Regular benchmark issuance in the SSA* market, mostly in USD, EUR and CAD

Senior debt issuance program

Supranational, Sub-sovereign and Agency

Providing value to investors as a high-quality AAA issuer


AAA ratings1 since our first issuance in 20032

1. Ratings are not a recommendation to buy, sell or hold securities and may be subject to revision or withdrawal at any time.

2. Fitch began providing a rating as of February 2019.

2003

2005

2007

2009

2013

2014

2019

Launch CAD 3 billion

CP Program

and

CAD 1.5 billion term

debt program

Increase of CP program

from CAD 5 billion to

CAD 7 billion

and

multicurrency flexibility

(£, €, JPY and CHF)

Increase of CP program

(from CAD 3 billion to

CAD 5 billion)

Launch USD 8 billion

term debt program

(USD, CAD, EUR)

New USD 5 billion CP

Program and

Reduced existing CP program

from CAD 7 billion to

CAD 3 billion

New USD 20 billion program

(144A / Reg S)

Three benchmark-size

issuances so far

CADEPO 2.75% 03/2022

USD 2 billion, 3-year

CADEPO 2.125% 06/2021


CADEPO 1.00% 04/2023


Highest rating supported by

> Low leverage, substantial liquidity and

high-quality diversified assets

> Creditors’ priority of claim over depositors’

participation deposits

> Strong governance, stable legal and

legislative framework

AAA/F1+

AAA/R-1 (high)

Aaa/P-1

AAA/A-1 (high)

Increase of US CP program

(from USD 5 billion to USD

10 billion)


Fair value as at December 31, 2019

Outstanding senior debt

1. Senior debt / (net assets + senior debt), at fair value.

Term notes: USD 9.5 B

Total senior debt: USD 16.3 B

CAD 1.0 B outstanding

CAD 3 B program

USD 6.0 B outstanding

USD 10 B program

CAD 1.0 B*

€0.75 B*

Consistently low debt ratio1

* Face value in local currency

** Face value in local currency / Issued on April 7th 2020

USD 2.0 B*

USD 2.0 B*

USD 1.25 B*

10% BOARD-SET LIMIT ON SENIOR DEBT RATIO1

Short-term notes: USD 6.8 B

USD 2.0 B**

USD 2.0 B*

5.8%4.8%4.4%

5.0%5.2%5.5%

0%

3%

5%

8%

10%

13%

15%

201920182017201620152014



> Available assets to cover debt after a stress

event1: An illustration

A sizeable safety cushion for creditors

15x Asset coverage of

unsecured debt after a

hypothetical market stress1

Gross

assets

Severe

market

stress1

Secured

liabilities2

Available

stressed

assets

Senior

unsecured

debt3

USD 36 BUnencumbered

high-quality and liquid

government securities4

US$ Bn

10% BOARD LIMIT ON

SENIOR DEBT RATIO5

5.8%Senior debt ratio5

1. Illustrative market stress scenario reflecting the portfolio’s loss over 1 year that could be exceeded in 5% of cases. Based on a historical value at risk using 3,000 days of observations (2008-2019).

2. Including securities sold under repurchase agreements (USD 18.1 billion), securities sold short (USD 2.9 billion) and liabilities related to derivatives (USD 0.8 billion).

3. Face value.

4. Including cash, short-term notes and bonds issued or guaranteed by the Government of Canada or by Canadian provincial governments.

5. Senior debt / (net assets + senior debt), at fair value.


Recent issuance

Banks35%

Central Banks / Official

Institutions47%

Asset Managers16%

Other2%

Banks39%


Institutions43%

Asset Managers

16%

Other2%

Asia17%

US & Canada

56%

EMEA18%

Latin America

9%

March 2019USD 2 billion, 3-year

(UST +29 bps, M/S +23 bps)

By Geography

June 2019USD 2 billion, 2-year


Asia9%

US & Canada

51%

EMEA25%

Latin America

15%

By Investor Type

April 2020USD 2 billion, 3-year


Asset Managers

7% Other2%

Banks21%


Institutions70%

Asia11%

US & Canada

44%

EMEA45%

Appendix


Main depositors as at December 31, 20181

Government and Public

Employees Retirement Plan

USD 51.5 billion

• 539,000 contributors

• 271,000 retirees and 18,000 surviving

spouses and orphans

• CAD 5.7 billion in retirement benefits

paid annually

• 4.1 million contributors

• 2.0 million beneficiaries

• CAD 13.9 billion in benefits paid annually


USD 53.1 billion

Supplemental Pension Plan for

Employees of the Québec

Construction Industry

USD 17.1 billion


• 94,000 retirees or surviving spouses

• CAD 906 million in benefits paid annually

Québec’s occupational

health and safety plan

USD 12.2 billion

• 224,000 contributing employers

• 3.9 million workers covered


Québec’s public automobile

insurance plan

USD 8.8 billion

• 5.4 million driver’s licences holders

• 6.5 million registered vehicles

• CAD 1 billion paid in compensation

annually

Pension Plan of Management

Personnel

USD 5.9 billion


• 30,000 retirees and 2,500 surviving

spouses and orphans


Generations Fund

USD 8.3 billion

• Fund used to repay Québec’s debt

• Fund used by the Government of

Québec to capitalize the employer’s

portion of retirement benefits of

employees in the public and parapublic

sectors

Retirement Plans

Sinking Fund

USD 60.9 billion

1 Updated information will be available with the publication of CDPQ’s 2019 annual report.


Laws and regulations

CDPQ

https://www.cdpq.com/fr/a-propos/gouvernance/loi

Laws pertaining to our depositors: a sample


http://legisquebec.gouv.qc.ca/en/showDoc/cs/R-9

Government and Public Employees Retirement Plan

http://legisquebec.gouv.qc.ca/en/showdoc/cs/R-10

Supplemental Pension Plan for Employees of the Québec

Construction Industry

http://legisquebec.gouv.qc.ca/en/ShowDoc/cs/R-20

Investments and Performance

Overall portfolio

https://www.cdpq.com/en/investments/overall-portfolio

Annual reports

https://www.cdpq.com/fr/performance/rapports-annuels

Risk management

https://www.cdpq.com/en/investments/risk-management

Stewardship investing

https://www.cdpq.com/en/investments/stewardship-investing

Key links

Governance

Policies

https://www.cdpq.com/en/about-us/governance/law

Board of Directors

https://www.cdpq.com/en/about-us/governance/board-directors

Executive Committee

https://www.cdpq.com/en/about-us/governance/executive-committee

Subsidiaries

Ivanhoé Cambridge

http://www.ivanhoecambridge.com/en

CDPQ Infra

https://www.cdpqinfra.com/en

Otéra Capital

https://www.oteracapital.com/en

Our depositorshttps://www.cdpq.com/en/about-us/clients

Caisse de dépôt et placement du Québechttps://www.cdpq.com/en

Note

The information on, or accessible through, our website or any of the other websites or links to websites referred to in this presentation is not part of

or incorporated by reference into this presentation.

https://www.cdpq.com/fr/a-propos/gouvernance/loi

http://legisquebec.gouv.qc.ca/en/showDoc/cs/R-9

http://legisquebec.gouv.qc.ca/en/showdoc/cs/R-10

http://legisquebec.gouv.qc.ca/en/ShowDoc/cs/R-20

https://www.cdpq.com/en/investments/overall-portfolio

https://www.cdpq.com/fr/performance/rapports-annuels

https://www.cdpq.com/en/investments/risk-management

https://www.cdpq.com/en/investments/stewardship-investing

https://www.cdpq.com/en/about-us/governance/law

https://www.cdpq.com/en/about-us/governance/board-directors

https://www.cdpq.com/en/about-us/governance/executive-committee

http://www.ivanhoecambridge.com/en

https://www.cdpqinfra.com/en

https://www.oteracapital.com/en

https://www.cdpq.com/en/about-us/clients

https://www.cdpq.com/en

Global Investor Presentation - CDPQ · 2020-05-07 · 2 Global Investor Presentation CDPQ at a glance Notes All amounts in this presentation are as at December 31, 2019 unless otherwise

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