Investissement Québec (IQ), rocked by tech stocks’ plunge, is heading for a $195 million loss — could be the biggest in its history.
This disappointment is mainly explained by the fall in equity markets over the past year, Quebec states in the budget presented on Tuesday.
“This decline in financial markets has hit companies in the technology sector in particular and has hurt the returns on investments held by Investissement Québec in this sector,” the budget reads.
If this loss of $195 million for the fiscal year ended March 31 is confirmed, it will be the largest since Investissement Québec was founded in 1998. In 2019-2020, the state corporation suffered a $180 million loss, largely related to the shock of the pandemic.
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Several large IQ stocks have lost value in the stock market over the past 52 weeks. Think of those in Sonder (-83%), Electric Lion (-76%), Lightspeed Commerce (-47%), NanoXplore (-39%), Coveo (-37%), Alithya (-24%), Cascades (-21%), Stingray (-20%) and MDF Commerce (-10%).
The decision by Economy Minister Pierre Fitzgibbon and IQ CEO Guy LeBlanc to have a greater presence in the venture capital sector has helped amplify the decline in the public company’s results in 2022-2023.
At the end of March 2022, IQ’s venture capital and mutual funds portfolio reached $1.4 billion, up from $712 million two years earlier.
“IQ’s new mandate is to look for flaws in the capital chain and fix those flaws. We may be taking more risks than the private sector,” explained the v.-p. Private placements at IQ, Bicha Ngo.
Note, however, that the riskiest government investments are not found in IQ, but in the Economic Development Fund (FDE) of the Department of Commerce. In 2020-21 and 2021-22, the EDF cost taxpayers more than $600 million.
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