Fix Auto and CDPQ

By Jeff Sanford

Blainville, Quebec -- November 27, 2015 -- It was reported earlier this week that Fix Auto has added new members to its board of directors. Considering the experience of the new members, it is clear that Fix Auto is setting itself up to be a big and serious player in the ongoing consolidation of the collision repair space.

Fix Auto has a bold plan to bring a franchise-type model to the global collision repair industry. In an interview this past summer at the NACE event in Detroit, the President of Fix Auto, Steve Leal, sat down with Collision Repair magazine and outlined his firm's global ambition. The company is already operating in Turkey, France and the UK, as well as Canada and the US, and has announced it is exploring the Australian market. Could Fix Auto be the next big Canadian franchise success story, a la Tim Horton's? 

The collision repair industry is currently undergoing a major wave of consolidation. Fix Auto is one of the big players. The latest additions to the board will smartly and ably help to fulfill those ambitions. One of the important appointments to the board of directors is Stéphane Léveillé, Senior Director of Private Equity in the mid-market sector at the Caisse de dépôt et placement du Québec (CDPQ).

This past summer, Collision Repair magazine reported that the massive Quebec-based public sector pension fund invested almost $9 million into Fix Auto. The money will be used by Fix Auto to fund its acquisitions and grow the company. The investment by such a sophisticated investment firm is a real vote of confidence in the Fix Auto business model.

CDPQ, of course, is a mighty and massive public sector pension fund manager in Quebec. The fund was created in 1965 to manage the investments of municipal and public sector pension plans in the province. The fund currently invests on behalf of 34 pension funds. It is considered one of the most sophisticated investment funds in the world and manages a mind-boggling $241 billion in assets, making it one of the largest institutional fund managers in North America. It is the leading private equity investor in Canada, and one of the 10 largest real estate asset managers in the world. Over the past four years it has delivered an annualized return of 9.6 percent, which is impressive in a world of, basically, zero percent interest rates.

“This is a real vote of confidence in Fix Auto,” says Steve Leal. “We’re proud to have them on board!”

Indeed, Léveillé's deep experience in business will undoubtedly be a major asset for Fix Auto. According to his official bio, Léveillé is a seasoned manager and entrepreneur. He has more than 20 years of experience in financial management, mergers and acquisitions and private equity placement, having worked with companies in both expansion and turnaround situations. He started his career within Intrawest as the Director of Financial Investment planning for the first two phases of development at Tremblant, and subsequently joined the airline Transat A.T. where he was responsible for merger and acquisition activities. He has also launched and sold two companies. His experience will be invaluable as Fix Auto evolves into the next phase of its growth.

“Stéphane brings professional diversity to the board,” Leal says. He notes that the investment by CDPQ is unique in the collision repair space. This investment is of a different nature than some of the other investments made in collision repair by big investment funds. Many of the management teams taking part in the race to consolidate the collision repair industry are what is known as private equity funds. These are investment funds that take a stake in a company and then help the management of the company grow the firm, or improve operations. A typical private equity firm makes its money when the improved organization is sold back into the market at a higher price than it was bought for. Typically, the hold periods are just a couple of years (five years is a typical time period). But CDPQ is different in that it is a long –term institutional investor. This is a benefit to Fix Auto, says Leal.

“A lot of private equity funds have shorter investment windows. What sets CDPQ apart is that they have a much longer investment window. This is a true partnership,” Leal says.

Also joining Fix Auto's new board of directors is Jorge Arruda, an insurance executive whose business career spanned 31 years in the property and casualty insurance industry. Arruda held a number of key executive positions in leadership roles in claims, sales and marketing, underwriting, and most recently as the Senior Vice President of Corporate Strategy. Arruda’s joining the board adds some deep experience as well. The extensive experience on the Fix board is a sign this company is serious about its global ambitions. Boards, of course, have the final say at companies. But anyone familiar with the business world knows that not all boards are entirely independent and active in nature. Given the nature of the new board, this does not seem to be case at Fix Auto.

“This is a real board,” says Leal. “Fix Auto means business.”

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