Ivanhoe Cambridge president and CEO Natalie Palladitcheff. (Courtesy Ivanhoe Cambridge)
The Caisse de dépôt et placement du Québec (CDPQ) is the latest big Canadian investor to shake up its real estate holdings, announcing on Wednesday that Ivanhoé Cambridge and Otéra Capital will now operate as investment groups within its structure.
Both Ivanhoé Cambridge and Otéra will keep their own brands in the market, but their corporate services teams will merge with CDPQ’s internal teams. This consolidation is expected to cut costs by up to $100 million a year, and it also means that Ivanhoé Cambridge’s president and CEO Natalie Palladitcheff will step down once the integration wraps up in about 18 to 24 months.
“This integration stems from a vision of an integrated CDPQ that maximizes its impact and performance to offer our depositors the best service for the most efficient cost” Charles Emond, president and chief executive officer of CDPQ, said in the announcement. “It allows us to further leverage our subsidiaries’ deep real estate expertise and the best talent in corporate services from all three organizations to execute our strategy and position CDPQ well for the future.
“We want to work as one team – one CDPQ – and build on the unique know-how of our talent to create value for our depositors.”
Integration kicks off next week
The process of merging these real estate subsidiaries starts January 29, with corporate services teams beginning to report directly to CDPQ right away. These teams handle support functions like finance, operations, digital technology, HR, legal affairs, communications, and risk management for the investment groups.
The investment teams themselves will officially become part of CDPQ’s investment groups on April 29 but will still do business under their own names – Ivanhoé Cambridge and Otéra Capital.
Besides cutting costs, CDPQ says this move should help:
- Focus more sharply on investment expertise;
- Make better use of business connections;
- Bring together global presence across all asset classes while looking for ways investments can align;
- Simplify governance;
- Boost analytical abilities;
- Streamline corporate services; and
- Create better chances for employee growth and movement.
As part of this changeover, CDPQ plans to buy out any minority shareholders in both Ivanhoé Cambridge and Otéra Capital so it becomes their only owner.
Palladitcheff set to exit
Once that deal is done, governance over these real estate arms will be folded into CDPQ itself – at which point Palladitcheff will leave her post.
“Since joining CDPQ, Nathalie has distinguished herself by her vision and strong leadership, which allowed her to take Ivanhoé Cambridge even further,” said Emond in the announcement. “The context in which she executed her mandate was marked by the dual challenge of the atypical environment caused by the pandemic and the profound transformation of the real estate sector.
“Nathalie accomplished a lot for CDPQ and our depositors by leading the transformation of the Ivanhoé Cambridge business model and by repositioning the portfolio toward promising sectors with her teams,” Emond said in the release. “I would like to sincerely thank her for her continuous support and important contributions to achieving our strategy.”
A new leader for this combined real estate group is expected to be named before everything settles down after this transition period.
“Over four years ago, we began to significantly transform Ivanhoé Cambridge during a period of profound change in our industry,” Palladitcheff said in the announcement. “I’m very proud of the colossal work accomplished with my teams and our portfolio is well positioned for the future. Being able to put all our energies into our core profession-our real estate expertise-will be decisive for creating value in an environment that continues to be complicated.
“My transformation mandate will conclude at the end of the transition period, in which I will be fully engaged.”
Otéra president & CEO Rana Ghorayeb will stay on managing that group’s investments as well as keeping a seat on CDPQ’s executive committee after all this goes through.
“Otéra Capital has evolved tremendously in recent years, particularly by growing our portfolio and diversifying our products and markets. We also multiplied collaboration opportunities in all sectors with our colleagues in the CDPQ group, which has greatly contributed to these advances made by our teams. This integration will allow us to continue moving in the same direction and to further leverage the expertise and strength of the entire CDPQ group,” Ghorayeb said in their statement.
This isn’t totally new – Ontario Teachers’ Pension Fund did something similar last June when they reorganized Cadillac Fairview into two entities under a fresh operating setup. That led their longtime head John Sullivan into retirement while they built an internal team focused solely on handling their real estate investments.
