Power Corp. set to invest $10B as it targets U.S. expansion

Power Corp. is prepared to invest more than $10 billion over the next five years to expand its empire while it also looks to sell some assets and exit the newspaper business, the holding company’s co-CEOs said Friday.

“We have a capacity in the coming five years to put capital exceeding $10 billion at work to play a consolidation game and to play the game in the big leagues,” Paul Desmarais Jr. said at a news conference after its annual meeting.

He said the sum will be larger when including money to be invested by subsidiaries like Power Financial.

A key area of focus is the U.S. pension fund business that is expected to undergo consolidation. Currently, it owns Putnam Investments, acquired in 2007.

“It’s a very fragmented business and we will have an opportunity to be one of the big consolidators in this industry.”

Desmarais added that the large Canadian holding company, which has assets around the world including a large stake in China Asset Management Co., is examining some of its capital intensive businesses to see if they can be sold at attractive prices.

Co-CEO and brother, Andre Desmarais, added that insurer Great-West Life and fund manager IGM Financial are not on the sales block.

Desmarais said he expects other Canadian newspaper owners will take a hard look at its decision to transform its Montreal La Presse news group into a not-for-profit structure.

The 130-year-old newspaper is owned by Square Victoria Communications Group, a subsidiary of Power, which plans to grant $50 million to the venture. Under the new structure, Power Corp. would no longer own the media company or have any ties with the not-for-profit structure.

“I ... think it makes sense for English Canada as much as it does for Quebec,” he told reporters.

Desmarais noted that all news media outlets are grappling with the rise of digital competitors such as Google and Facebook, and will have to figure out how to proceed.

But Andre Desmarais said he’s optimistic that the federal government will end up providing funding because it would want to help a medium that supports democracy.