AB SOVERIGN WEATH FUND

'I'm going to lead differently here': Evan Siddall rocked the boat at CMHC, but looks to calm the waters at AIMCo

'You lead based on what the what the circumstances suggest'

Author of the article:Barbara Shecter
Publishing date:Oct 13, 2021 •

CMHC CEO Evan Siddall in 2015. 

PHOTO BY GALIT RODAN/BLOOMBERG FILES


Evan Siddall built a reputation as an outspoken and sometimes controversial figure during his seven-year tenure CEO at Canada Mortgage and Housing Corporation.

So when he arrived in Edmonton in July as the freshly appointed chief executive of Alberta Investment Management Corp., a traditionally quiet manager of pensions, endowments and government fund assets, that was being buffeted by some controversies of its own, he probably felt right at home.

AIMCo was working to steady its nearly $120-billion ship — and relationships with some 30 clients — after a $2.1 billon loss last year on a volatility strategy when markets were rocked by the declaration the global pandemic.

It was also locked in a public battle with Alberta Teachers’ Retirement Fund, which had been forced by legislation passed in 2019 to use AIMCo as its sole investment manager. AIMCo and ATRF initially failed to reach an agreement on the terms of their new arrangement, so these were imposed on them through a government order in January.

The asset manager was at the centre of a few political storms, too, the biggest brought about when Alberta Premier Jason Kenney mused that he might pull Alberta out of the Canada Pension Plan, putting the spotlight on AIMCo as the likely future manager of those funds.

Then last month, another Canadian pension giant, Caisse de depot et Placement du Quebec, thrust divestment — a sensitive issue in oil-rich Alberta — back into the spotlight with a declaration it would sell off all assets that produce crude oil products by the end of next year.

AIMCo picks former CMHC CEO Evan Siddall as leadership overhaul continues


In his first major interview since taking the helm at AIMCo, Siddall — who pledged to keep a lower profile in his new assignment — said he thinks he has helped smooth the waters so far.

For one thing, he says, his arrival helped AIMCo and Alberta Teachers’ Retirement Fund forge a new negotiated management agreement in September, just a few months after he arrived. He is quick to point out, though, that he doesn’t think this reflects poorly on previous management, particularly given that the relationship was akin to an “arranged marriage” that one side was clearly unhappy about.

“I did have the advantage of, if there was a pile of something people were standing in, they were overwhelmed by the stench of that I suppose, and I wasn’t,” Siddall said.

“Sometimes a good hockey team changes the coach and the team plays better; it has nothing to do with anything other than cosmetics but, yeah, that is part of the story for sure.”

But with much work underway at AIMCo, including completing the implementation of a series of recommendations to the board from outside experts to beef up risk management and make changes to the culture following last year’s volatility loss, there can be no promises of smooth sailing.

For one thing, AIMCo is unlikely to follow any sort of divestment strategy, preferring to invest in and capitalize on Alberta’s homegrown strength and expertise in energy throughout any transition to a lower carbon economy, Siddall said. That could raise questions about whether the Crown corporation is being directed by government, which has its own reasons for wanting a healthy oil and gas industry. But Siddall is quick to dispel this idea.

“I’ve had no conversation, not a single conversation with the government, where they instructed us as to how to position ourselves in the energy sector,” he said. “It’s an investment decision.”

There’s money to be made by those with long-term, patient capital (and) insight into the energy sector

Siddall said he believes “there’s money to be made” by those with “long-term, patient capital (and) insight into the energy sector” including cutting-edge clean technology. It is an echo of what AIMCo chair Mark Wiseman told the Post last year. Wiseman joined the Alberta pension manager’s board in July 2020 and encouraged Siddall to apply for the CEO job after Kevin Uebelein stepped down before the end of his employment contract this year.

“That’s AIMCo. If it’s anybody it’s AIMCo,” Siddall said. “We have a home-field advantage that we’re going to take advantage of and that, in my mind, does not include divestment.”

In spite of his strong views and his reputation, Siddall said he intends to work mostly behind the scenes, with public statements confined mainly to required appearances before a government standing committee.

“I’m going to lead differently here,” he said “You lead based on what the what the circumstances suggest.”

Still, a lower public profile doesn’t mean accepting the status quo.

Some legislation in Alberta over the past few years has aimed to extend the arms-length relationship between AIMCo and the provincial government, and Siddall — and Wiseman — are hopeful they can drive that wedge further to clarify for clients that AIMCo exists to make money for them and “not to be a tool of government.”

“I think the current government’s quite clear on that and that’s good, and the more we can clarify that the better,” Siddall said, though he declined to weigh in on what, if anything, he thinks the UCP will do.

My sincere answer is we don't talk about it (and) I don't want to talk to them about it. That’s a political question


“It’s their decision, not ours, and all we can do is tell them how we could be more independent and the sorts of things that they might consider,” he said. “So we’ve done that, and they will decide whatever they want decide.”

He also demurred when asked about the possibility of Albertans’ portion of the Canada Pension Plan being severed from the national pension scheme and brought under the AIMCo umbrella, something Alberta Premier Jason Kenny has touted and his United Conservative Party-led government is studying.

“My sincere answer is we don’t talk about it (and) I don’t want to talk to them about it,” said Siddall. “That’s a political question.”

However, he noted that AIMCo is proving it can handle more assets under management.

“Our job is to build an organization that can do what we’re asked to do, period,” he said, adding that the pension manager is successfully integrating the ATRF assets and additional assets of the Workers’ Compensation Board. It will soon be adding the investment assets of Alberta Health Services, with current assets under management rising to $153 billion from $118.6 billion at the end of last year.

Something like a CPP transfer would not happen overnight in any event, Siddall said, which would leave AIMCo plenty of time to complete its work on integration and risk management — if the government chooses to go that route.

Jim Keohane, seen pre-retirement, sees some “mania” in the markets, which leaves long-term investors with questions about where to put their money.

 PHOTO BY TYLER ANDERSON/NATIONAL POST FILES

In the meantime, he is getting to know the board of directors, about half of them in person. One such meeting was a two-hour conversation with Jim Keohane about how he ran the Healthcare of Ontario Pension Plan (HOOPP) for eight years as CEO before retiring last year.

In an interview last week, Keohane told the Financial Post that today’s markets resemble past bubbles, propped up by liquidity from policy and monetary interventions. He also sees elements of “mania” in the markets, leaving long-term institutional investors with few safe places to invest.

Siddall doesn’t disagree.

“It’s hard to make money,” he said, noting that AIMCo’s job is to satisfy its pension, endowment and government fund clients by beating benchmarks — or doing less badly in poor market conditions — as well as keeping ahead of inflation and managing interest rate risks.

“Asset prices where they are and so much cash flying around… both through central bank support and fiscal support, it’s just priced all assets ridiculously,” Siddall added.

Siddall said the key for investment professionals, including those at AIMCo, is to “keep some dry powder around for dips… You’ve got to just look for opportunities to make money for your clients.”

He leaves such matters primarily in the hands of his chief investment officer. For now, he says, the view is that inflation is transitory, though they are keeping a keen eye on that, and suggests that central bankers will begin to rein in quantitative easing.

“My goal (is) to set a strategy for the institution to make sure we’re in the right businesses, to make sure we’ve got the right capital and people behind those businesses, and that we have a decision-making function that is excellent,” he said. “And so we’re working on improving that.”