Power Corp.’s sustainable-investing arm gains familiar new shareholder

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The $3-billion sustainable-investing arm of Power Corp. POW-T has gained a new shareholder, though the two businesses are no strangers.

Power Sustainable, which invests in renewable energy, green infrastructure and agri-food companies, is set to announce Monday that Great-West Lifeco has signed on as a minority shareholder. Great-West, the insurance provider, is also a subsidiary of Power Corp., the holding company of Montreal’s Desmarais family.

Under the deal, Great-West will commit to investing in Power Sustainable’s funds in the coming years, the companies said in a statement. Power Corp. will remain the majority owner of the sustainable-investing enterprise, which is led by Olivier Desmarais, its chairman and chief executive officer.

Power Sustainable aims for profitable returns alongside environmental results for its institutional investors. Great-West’s investment will allow Power Sustainable to accelerate expansion in its equity and credit businesses, while the insurer bolsters its green objectives, the companies said.

“They’ve been involved in our products and, to me, this is a vote of confidence – that they are enjoying the investment returns and the sustainable profile that we are giving them,” Mr. Desmarais said in an interview. “And I see this as about to create even further co-operation.”

In 2021, Winnipeg-based Great-West partnered with Desjardins Group, National Bank of Canada and Switzerland’s Après-demain SA in a renewable energy infrastructure fund launched by Power Sustainable. Last year, the sustainable-investing enterprise reported that the fund’s size had grown to $1.8-billion, backed by pension funds, insurance companies and family offices.

With the latest transaction, Raman Srivastava, Great-West’s global chief investment officer, will join the Power Sustainable board of directors.

“Power Sustainable’s expertise in the area of sustainable investments will provide a more diversified set of investment options for clients and our general account,” Mr. Srivastava said in a statement.

Power Sustainable’s other arms include a unit that provides credit for infrastructure such as clean energy, transport and utilities, as well as one that invests in companies that prioritizes sustainability in food systems. Great-West has also invested in those funds.

Late last year, Power Sustainable’s Potentia Renewables unit added to its portfolio with a 50-per-cent stake in three solar farms in California, Arizona and Nevada, amounting to 278 megawatts. That deal pushed its holdings to 1,300 MW of solar and wind developments across the continent.

Later this year, it plans to launch another division concentrating on decarbonization of industrial processes. Mr. Desmarais said he could not yet offer more details.

Investors in renewables and cleantech have spoken often in the past two years of struggles raising capital and expanding companies owing to skittishness over longer-duration payouts and, in some regions, backlash against environmental, social and governance investing. Mr. Desmarais said that has not been his experience.

He points to jurisdictions such as the European Union and California moving forward with more stringent policies for carbon reduction and climate-related disclosure. That has helped shift more money into developers of climate technology, he said.

“Irrespective of the political debate, one way or the other, there is a growing pool of capital and more than enough escape-velocity capital for players like us to have a wonderful runway. And I just so happen to believe that in this transition. What it means is eventually what we’re investing in will be the market of everything,” Mr. Desmarais said.

Canada still has a rich set of investment targets, especially for a mid-market fund manager, he said. The important thing is to provide portfolio companies with the resources to expand what they do profitably, he added.

“When you think about Canada and the United States, we just need to focus in and develop and help grow these companies, which is where the teams that we hire really are experts in.”