Fix Auto links up with massive Quebec pension fund

By Jeff Sanford

Blainville, Quebec -- July 8, 2015 -- The consolidation trend in the collision repair industry has a new (and big) player. Fix Auto has just announced that major provincial pension fund La Caisse de dépôt et placement du Québec is investing a significant amount with the company.

According to a press release “the Caisse” (as it’s known to Bay Street types) will invest $8.5 million to help Fix Auto fuel “growth in Canada and internationally.”

As Collision Repair magazine has been reporting, major investment funds have been busy acquiring stakes in collision industry chains. The funds are then using these stakes to take part in the ongoing consolidation trend sweeping through the collision repair sector. The investment funds see big opportunities in this industry.

Recently, Collision Repair magazine reported that major Ontario-based pension fund, OMERS, has taken a stake in US-based collision repair chain, Caliber, as a way of playing the consolidation angle. Major American buy-out fund Blackstone has taken a stake in Service King to the same end. And now the mighty Caisse is joining the fray.

The Caisse is one of the largest institutional fund managers in Canada and North America. The fund takes in deposits from 32 different public and private pension and insurance funds in Quebec. The $8.5 million investment in Fix is a just a tiny share of the Caisse’s massive portfolio of over $225.9 billion. That money is invested in an amazing number of different projects. The Caisse is one of the 10 largest real estate asset managers in the world. In just the last couple of weeks the fund has invested $250 million in toll roads and highways in Mexico and announced a $53-million interest the Quebec City airport.

Years ago the fund had a reputation for investing with a political mandate. The Caisse was often considered the finance arm of “Quebec Inc.” But some bad investments led to a revamp of its investing process and the fund is now run on a more strictly return-based philosophy.  The fund is currently headed up Michael Sabia, the former CEO of Bell Canada from 2003 to 2008.

The Globe and Mail recently reported on a speech Sabia delivered in Montreal. The CEO said the pension fund has a “strategy” to become more global in its outlook and will shifting its sights from a focus on Quebec investments to the broader global economy. The firm will open new overseas offices in Washington, Mexico, Singapore, Mumbai and Sydney. Those offices will join the already existing offices in New York and Beijing. “[Become global] will be one of the cornerstones of our work for the next five years,” Sabia was quoted as saying.

The deal between the Caisse and Fix suggests that the fund, like OMERS in Ontario, sees an opportunity in financing consolidation in the collision repair industry. The Fix-Caisse team will be a formidable player in this trend.

“Having a long-term financial partner gives us the agility that we need to achieve our aggressive growth targets,” says Steve Leal, President of Fix Auto. He said the investment will help accelerate expansion of the network in Canada and globally. “…having the Caisse on board is a major vote of confidence in the Fix Auto network,” says Leal.

The investment comes in the form of both equity share purchases and subordinated debt, and is to be split between Fix Auto’s Canadian and International operations.

“This partnership with the Caisse is a symbol of our commitment towards the Quebec market. Fix Auto is a Canadian success story which is now on the global scene, and given the pace of our international growth plans, we are truly proud keep our roots planted here,” says Leal.

Founded in 1992 in Quebec, Fix Auto now encompasses over 360 locations worldwide. For more information, please visit fixauto.com.

 

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