The sustainable-investing arm of Power Corporation of Canada POW-T has shut down its investment management office in Shanghai as it looks to redeploy capital to more profitable opportunities.
Power Corp. spokesperson Stéphane Lemay confirmed Thursday that Power Sustainable had recently closed its operations in Shanghai, an office that had a “relatively small number” of staff and oversaw the Power Sustainable China fund. The closure follows an announcement from Power Sustainable earlier this month that the company had wound down its China public equity strategy, which had a little more than $715-million in assets, at the end of 2023.
The Power Sustainable China investment managed open-end funds and assets on behalf of clients through separate investment management agreements. The growth strategy for the fund was focused on raising third-party capital.
However, most of those assets – about $500-million – were proprietary commitments from Power Corp., as the fund gained little traction with third-party investors.
Now, according to Power Corp.’s most recent company filings, Power Sustainable has “realigned” its strategies and liquidated the Power Sustainable China portfolio. The investments managed through the China public equity strategy were held in cash and will be returned to investors, the company said in the filing.
Since taking over the role of chief executive officer of Power Corp. in 2019, Jeffrey Orr has laid out his plans to investors.
“Power Sustainable is focused on growing its alternative asset management business primarily through fundraising third-party capital and will reallocate resources to other strategies which are well positioned to raise capital and meet investors’ needs,” the company noted during its most recent earnings presentation.
The change in strategic direction comes as several other Western investment fund managers have struggled to gain momentum in the region. During a conference in Shanghai this week, JPMorgan Chase & Co. chief executive officer Jamie Dimon told an audience that the U.S investment bank had seen growth in China but it had been tough, as some of the investment banking business had fallen off a cliff in the past couple of years.
However, Power Corp.’s Mr. Lemay said the company remains “optimistic about China’s future prospects and economic growth.”
The company will continue to have investments in mainland China’s public equity markets through its Qualified Foreign Institutional Investor (QFII) licence, he said. The Power group of companies also remains invested in China through subsidiary IGM Financial Inc.’s 27.8-per-cent strategic investment in China Asset Management Company, the country’s second-largest mutual fund manager, with headquarters in Beijing.
Power Corp. executives also said in the earnings presentation that the company will continue to explore opportunities to deploy capital that are in line with its strategy to “maximize value and meet return objectives.”
Power Sustainable has a climate-focused strategy with about $3.8-billion under management as of March 31. The company aims to provide institutional investors with profitable returns alongside environmental results using several investment strategies. In addition to the now-defunct China fund, Power Sustainable manages three other investment strategies focused on renewable energy, agri-food companies and its latest fund, launched in 2023, the Global High-Yield Infrastructure Credit Strategy, which focuses on green infrastructure.
Earlier this month, Great-West Lifeco Inc. – another Power Corp. subsidiary – signed on as a minority shareholder of Power Sustainable, owning slightly less than 20 per cent on a fully diluted basis. The deal will see Great-West commit to investing in Power Sustainable’s investment funds in the coming years.
With a file from Reuters