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The investment arm of the Quebec government, which oversees $5 billion, will see its size double, its budget increase and its aversion to risk slackened so as to “make private investment explode in all the regions of Quebec,” as Premier François Legault said. (La Presse canadienne)

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Talking point: Created in 1998 as a way to promote “Québec as a propitious location for investment,” IQ provides much of the muscle behind the province’s staunch economic nationalism. Its subsidizing of video-game producers has turned Greater Montreal into the world’s fifth-biggest gaming hub. IQ hasn’t been particularly risk-averse in the past—particularly when it comes to doling out millions to Bombardier and Ciment McInnis, two chronically underperforming assets controlled by Quebec’s powerful Beaudoin clan. Revamping the institution has been a priority of the premier—“Legault is obsessed with Investissement Quebec,” a senior Coalition Avenir Québec source told The Logic; today’s moves give more discretionary power over IQ’s bounty to Economy and Innovation Minister Pierre Fitzgibbon, the source said.

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The Crown corporation purchased an approximately six per cent stake from Claude Roy, the e-commerce firm’s former CEO. Mediagrif’s stock rose approximately 13 per cent on the news. (La Presse)

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Talking point: Investissement Quebec is just the latest Crown corporation seeking to bolster its investment portfolio with tech companies. My colleague Zane reported that the Caisse de dépôt et placement du Québec (CDPQ), Quebec’s largest pension fund, is planning to create a new technology portfolio that will invest between $1 billion to $2 billion in “disruptive technologies.” The CDPQ also invested $40 million in travel app Hopper in 2016, and led a US$166-million investment round for software firm Lightspeed. Pension giants in the rest of Canada are making similar inroads—the Canada Pension Plan is looking to invest between $500 million and $1 billion in venture capital funds, while both the Ontario Teachers’ Pension Plan and the Ontario Municipal Employees’ Retirement System have recently established new investment departments focused on innovative tech companies.

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Investissement Québec (IQ), the provincial government’s investment arm, and the Fonds de Solidarité FTQ, the venture capital fund of the province’s largest union federation, have each pledged $75 million over five years to support the province’s sizeable biotech and life-sciences sectors. (The Logic)

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Talking point: Quebec biotech has been thriving as of late, particularly in the development of so-called “precision medicine,” which targets subgroups of people and therefore allows doctors to better predict treatment and prevention strategies. In November 2019, the Caisse de dépôt et placement du Québec, the Fonds and IQ, along with BDC Capital, invested in Toronto-based Amplitude Ventures’ $200-million fund, aiming to support precision-medicine development. The Fonds has also backed Repare Therapeutics, which is about to go public on the Nasdaq.

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Quebec City-based Eddyfi Technologies, which specializes in the non-destructive testing of pipelines, acquired the Irish company by way of a strategic partnership with the Caisse de dépôt et placement du Québec and private equity firm Novacap. A group led by National Bank will provide new debt financing, with additional debt from Investissement Québec. (The Logic)

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Talking point: Having bought into Eddyfi in 2017, Quebec’s public pension manager is now helping it grow internationally by leveraging other important bits of Quebec, Inc.’s machinery. The decidedly unsexy pipeline-inspection industry is nonetheless a growing concern; the average mile of natural gas transmission pipeline in the U.S. is over half a century old. “Asset aging, coupled with heightened public concern about environmental protection, has given rise to increasingly stringent pipeline integrity management programs,” said Novacap’s David Lewin.

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Last October, François Legault’s government announced an investment in Paris-based Flying Whales, which hopes to build massive dirigibles capable of carrying up to 60 tonnes of cargo over long distances. (Le Journal de Québec, The Canadian Press)

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Talking point: Legault was forced to defend the whalish bet in the wake of Tuesday’s Investissement Québec (IQ) revamp, which will see the government investment arm increase its appetite for risk. “I think Quebecers must reconcile themselves to risk,” Legault said. It’s certainly a risky proposition: Flying Whales has no prototype, no paying customers and, at least according to one expert, technology that simply won’t fly. It’s also financed in part by a company with close ties to the Chinese government—which secured the same-sized chunk of the firm with three times less the investment. Opposition MNA Vincent Marissal said Pierre Fitzgibbon, economy and innovation minister, “needs to understand that IQ’s $5 billion isn’t his slush fund.”

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The investment, led by OMERS Growth Equity, values the Quebec City-based firm at $1.46 billion. Previous investors Evergreen Coast Capital, Investissement Québec and Fonds de solidarité FTQ also participated. (The Logic)

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Talking point: Coveo plans to use the capital for acquisitions and staff growthit’s currently adding about 60 people a quarter, about 50 of which are based in Canada. “Coveo is a real company with real customers and it’s growing,” CEO Louis Têtu told The Logic. Most of the new hires will be in Montreal and Quebec City. The firm recently opened a Montreal office that has 160 people in it, but can fit 300. “It’ll be full in a year,” said Têtu. By nearly any metric, Coveo is now well ahead of its perennial rival, Montreal-based Element AI: the former has $100 million in annual revenue, the latter less than $10 million. Even in fundraising, Coveo’s current round is larger than Element’s $200-million Series B announced in September. Though Coveo has raised most of its money from Canadian investors—75 per cent of its cap table is Canadian and about 65 per cent is from Quebec—it hasn’t taken subsidies from government. That’s something Têtu is proud of: “We’re actually demonstrating that we can build value here without government subsidy.”