SGF POSTED A NEGATIVE RATE OF RETURN OF 14.3% IN 2008. IN THE CURRENT ECONOMIC CONDITIONS, HOW WOULD YOU QUALIFY THIS RESULT?
In a trying year for all investors, SGF held its own, especially since it is Québec’s only institutional investor whose mission stipulates that it make all its investments with the objective of economic development. We incurred a loss, but the results for our overall investments are positive.
This outcome reflects the calibre of our management and the competence of our employees, as well as that of our partners at portfolio companies.
MOST OF THE COMPANIES IN SGF'S PORTFOLIO ARE IN THE MANUFACTURING SECTOR. WHAT DO YOU FORESEE FOR THESE COMPANIES IN 2009?
The next year will certainly not be easy. Some sectors, such as forest products, are dependent on a recovery in the construction industry in the United States; others, such as petrochemicals, are affected by the decline in consumer spending, which leads to lower demand for all types of plastic.
It will be a challenging year for SGF. We will provide help to companies in need of assistance and will also strive to act on business opportunities, since a slowdown may also be the right time for strategic acquisitions.
HOW CAN SGF HELP ITS PARTNERS GET THROUGH THE CURRENT ECONOMIC CRISIS?
As a partner, SGF assists the companies in which it invests, whether the economy is expanding or contracting. In 2008, we invested an additional $100 million in our portfolio to assist our partner companies. In addition, SGF’s investment support and management team offers strategic advice to its partners and helps them with such matters as their financing negotiations or development of their business plans.
MORE SPECIFICALLY, HOW WILL SGF INVEST THE ALLOCATION PROVIDED BY THE QUÉBEC GOVERNMENT?
The Québec government has allocated SGF an additional $1 billion – $500 million in 2009 and another $500 million in 2010 – so it can step up its investments and offer new financing tools to help a larger number of businesses weather the crisis.
While continuing its ongoing investment program, SGF will use new financing tools adapted to the needs of companies that are tested by the financial crisis. In addition to taking equity positions by purchasing common shares, SGF will offer financing in the form of preferred shares and loans.
However, for both ongoing investments and investments made with the government’s special allocation, SGF will base its decisions on the same analysis and criteria, with due regard for rigorous risk management.