Pierre Fitzgibbon may be, according to François Legault, a “financial transaction genius”, but we cannot say that his major reform of Investissement Québec in 2020 turned out to be brilliantly profitable!
Investissement Québec (IQ), with its portfolio of investments and loans in Quebec companies, reported a return of 2.6% in 2023-2024. Over five years, IQ has posted an annualized return of 4.6%.
For comparison, the BDC (Business Development Bank of Canada), which is IQ’s federal counterpart, ended the 2023-2024 fiscal year with a return of 4%. And over five years, the BDC’s annualized return is 9.9%.
The BDC thus proves to be twice as efficient as Investissement Québec. There is really nothing to pat oneself on the back about.
The famous Fitzgibbon reform has clearly not yet enabled IQ to offer competitive performance!
NOT COMPETITIVE
It should be noted that IQ’s poor performance comes at a time when the financial markets have nevertheless performed relatively well.
Let’s take IQ’s 2.6% return for the period from 1er April 2023 to March 31, 2024. This is a really poor performance compared to the one-year performance of the following “financial comparables”:
1. Toronto S&P/TSX Index: 14.0%
2. IQ-30 index of Quebec companies listed in Toronto: 8.1%
3. Median of diversified pension fund funds: 12.2%
4. Toronto-listed iShares Diversified Fund XBAL: 13.1%
IQ’s five-year yield of 4.6% is also hardly competitive compared to the annualized yield of “financial comparables” over five years to March 31, 2024:
5. Toronto S&P/TSX Index: 10.0%
6. IQ-30 index of Quebec companies listed in Toronto: 9.73%
7. Median of diversified pension fund funds: 7.13%
8. Toronto-listed iShares Diversified Fund XBAL: 6.8%
It should also be noted that with the Stock Market Bonds offered by Épargne Placements Québec, which are completely risk-free, the small Quebec saver has collected an annualized return of 6.34% over five years!
THAT SAID…
The Fitzgibbon reform generated a sharp increase in financial aid to businesses: loans to businesses rose from $4.4 billion in 2019 to $6.1 billion in 2023, an increase of 38.6%.
IQ’s equity portfolio stands at $7.53 billion, compared to $4.26 billion as of March 31, 2019. Up 77%.
IQ also manages a portfolio of Mandatory Funds (FDE, FCEQ, CRNE) on behalf of the government. The value of this portfolio as of March 31, 2024 is $7 billion, which is roughly the same as as of March 31, 2019. Note that this portfolio does not influence IQ’s performance.
During these same five years, IQ’s workforce has jumped by 143%, from 534 employees (March 2019) to 1,296 employees in March 2024. The number of managers stands at 175, 79 more than in March 2019.
BOSS COMPENSATION
The remuneration of top IQ bosses has exploded since the implementation of Pierre Fitzgibbon’s IQ reform.
Investissement Québec CEO Bicha Ngo earned a total compensation of $1.1 million in 2023-2024. Previously serving as VP, she replaced Guy LeBlanc on March 1er last February. He got away with a total compensation of $969,263 for the 10 months of work accomplished as CEO during the 2023-2024 fiscal year.
Five years ago, former CEO Pierre Gabriel Côté received total compensation of $540,808 during the 2018-2019 fiscal year, two less than Mr.me Ngo.
IQ’s four highest-paid executives today earn about twice as much as their predecessors did five years ago.
At IQ, bonuses are commonplace. Despite a low return of 2.6%, the Crown corporation paid out $14.2 million in 2023-2024. This is 63% more than in 2020-2021 ($8.7 million in bonuses) when IQ had reported an extraordinary return of 25.1%.
Last but not least, the annualized return of 4.6% over the five years of Fitzgibbon’s IQ reform is lower than the annualized return of 5.4% that IQ had produced over the previous five financial years.
Pierre Fitzgibbon may be a “financial transaction genius,” but IQ hasn’t yet taken advantage of it!
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