Power Corporation of Canada

• Date founded: 1925
• Industry: Management and holding
• Corporate headquarters: Montreal, Quebec, Canada
• Type: Public

Overview

Power Corporation of Canada is a diversified international management and holding company based in Montreal, Quebec, Canada. It has interests in business sectors, including communications and financial services. Its divisions are Lifeco, IGM Financial, and Pargesa. Lifeco is a financial services holding company offering asset management and insurance. IGM Financial provides investment advisory and management services. Pargesa serves industries such as cement, energy, wines and spirits, certification, electricity, natural gas, energy, and environmental services by providing solutions for problems via minerals.

History

During the late nineteenth century, Winnipeg, in the western province of Manitoba, was a growing frontier town thanks to the expanding Canadian Pacific Railway. The potential of Winnipeg was not developing well, however, because the region was remote and local farmers struggled with droughts. Businessman Jeffry Hall Brock understood that Winnipeg needed capital to develop agriculture and retail operations. He saw insurance sales as the answer. Farmers would gain security, and the payments could fund development. None of the forty insurance companies operating in Canada were based in the West, and only nine were Canadian companies.

Brock incorporated the Great-West Life Assurance Company in 1891. Brock and two other salespeople brought in more than $2 million, selling 834 life insurance policies in the first year. Great-West continued to grow, expand, and would eventually become part of the Power Corporation of Canada.

Canadians A.J. Nesbitt and P.A. Thomson founded a Montreal investment firm in 1912. Nesbitt, Thomson and Company began underwriting and investing in Canadian hydroelectric utilities. They provided financing for construction and development. They would soon become aware of a Chicago, Illinois-based speculator who was buying American utility companies.

Nesbitt and Thomson were wary. They feared American speculators were planning to gain a foothold in Canada’s fledgling power industry. The financiers saw the increasing demand for residential and industrial power as an opportunity and founded Power Corporation of Canada on April 18, 1925. This was done largely to keep Canadian power operations in the hands of Canadians. They saw a diversified holding company as the way to stave off American incursions into the electricity industry of Canada.

The founders held the majority of the company’s shares. Nesbitt was president of the holding company, though the vice president, James B. Woodyatt, oversaw most of the day-to-day operations. Nesbitt and Thomson added value to the company’s portfolio by investing in utility companies. The company ran about forty electrical power plants in less than a decade. In the early 1930s, Power Corporation had 1.5 million customers in Canada.

Nesbitt and Thomson developed several strategies to encourage demand for electricity. They created a department that focused completely on industry, encouraging owners to locate new plants near Power Corporation utility companies. They also opened stores stocked with only electrical appliances and devices to encourage consumers to press for electrical service to communities.

The company continued to add diverse utilities to its portfolio. Investments in public utilities stretched from the United States to Brazil and Japan. While Power Corporation suffered losses during the Great Depression of the 1930s, and sold many properties at a loss, it weathered the decade and the troubles of World War II (1939–1945) that followed. Postwar industrial expansion boosted the demand for power, and Power Corporation was heavily invested in its six primary hydroelectric companies. Nesbitt and Thomson grew concerned during the 1950s as three important utility investments were nationalized by the Canadian and French governments. They changed corporate strategy by diversifying the company’s portfolio using the financial settlements from government appropriations and takeovers. Investments included the pulp and paper industry, through an investment in Bathurst Power and Paper.

Nesbitt and Thomson died in 1954 and 1956 respectively and their sons took control of the company. They continued to diversify, investing in oil, gas, pipelines, finance, pulp and paper, and other industries. As other utilities in the portfolio were nationalized, Power Corporation again used the proceeds to diversify. Peter N. Thomson, however, wanted the company to have more control in a smaller group of businesses. Between 1962 and 1965, the number of companies in the Power portfolio fell from thirty-one to eighteen. The company faced multiple problems during the 1960s, however, including labor disputes and rising operating costs in the pulp and paper industry. In response, Thomson agreed to a merger with the holding company Trans-Canada Corporation Fund (TCCF). TCCF, controlled by Paul Desmarais, was heavily invested in newspapers and transportation, including bus lines.

In 1969, Investors Group acquired controlling interest in Great-West’s common shares. Later that year, Power Corporation of Canada acquired Investors Group.

Thomson and Desmarais each held 30 percent of voting shares in the newly merged company. Desmarais had sole control by 1970, and he restructured Power Corporation through the next decade. He trimmed the portfolio to include a small number of diverse assets over which the company had a great deal of influence. He next began to divest of transportation assets and acquired 4.4 percent of the voting shares of the oil, rail, real estate, and shipping conglomerate Canadian Pacific Limited. Power Corporation invested in Pargesa Holdings S.A., a Swiss corporation, and in 1984 transferred major financial holdings in Investor Group, Great-West Life, Montreal Trust, and Pargesa to a new subsidiary, Power Financial Corporation (PFC). In 1985 PFC completed an initial public offering of stock.

Free of all debt, Power Corporation acquired radio and television stations that were eventually consolidated into Power Broadcasting, a wholly owned subsidiary. The company also established a business relationship with the Chinese government through the China International Trust and Investment Corporation.

In 1989 Power Corporation agreed to an unsolicited offer made by Stone Container Acquisition Corporation. It sold its interest in Consolidated-Bathurst, a pulp and paper concern, and soon after agreed to sell its shares in Power Financial to Montreal Trust. Desmarais continued to add to the company’s portfolio until he stepped down as chairman and chief executive officer (CEO) in 1996. His son Paul Desmarais, Jr., was named chairman and co-CEO, while his son Andre Desmarais was named president and co-CEO. Among their deals was the acquisition of London Insurance Group through Great-West. This made Great-West Lifeco Canada’s largest health and insurance company.

In February 2020, R. Jeffrey Orr became president and Chief Executive Officer of Power Corporation. Mr. Orr had previously served in a similar role at Power Financial since 2005. Although the head of a powerful conglomerate, Mr. Orr has sought to pursue a lower public profile than his predecessors.

Impact

Power Corporation of Canada heavily influenced the expansion of the electrical grid in Canada. Through its investments and encouragement of industry and consumers, it increased demand and availability of power in that country.

Under Desmarais’s leadership, Power Corporation expanded its reach into Chinese markets. Desmarais, the founding chairman of the Canada China Business Council, was influential in developing markets and business relationships between Canada and China.

In keeping with Nesbitt’s, Thomas’s, and Desmarais’ commitment to their country, Power Corporation advocates and supports community and educational programs. The company promotes scholarships, school- and community-based literacy programs, and the arts. Power Corporation also supports programs that encourage conservation, preservation, and protection of biodiversity and ecosystems, as well as programs that address climate change.

In the 2020s, the company achieved several milestones. Its wealth and insurance product portfolio continued to expand, and the company continued increasing investment in digital tools and services, wealth management, and clean energy products. In 2023, Power Corporation invested in Rockefeller Capital Management and ChinaAMC. In late 2024, the value of the company's assets under management and advisement reached all-time highs.

Bibliography

“About.” Power Corporation of Canada, www.powercorporation.com/en/about. Accessed 16 Jan. 2025.

"Expanding in the Face of Challenges." Power Corporation of Canada, www.powercorporationhistory.com/en/2001-present. Accessed 16 Jan. 2025.

“Organization Chart.” Power Corporation of Canada, www.powercorporation.com/en/companies/organization-chart. Accessed 16 Jan. 2025.

“Paul Desmarais Remembered as Visionary Entrepreneur with Great Influence.” CBC News, 9 Oct. 2013, www.cbc.ca/news/business/paul-desmarais-remembered-as-visionary-entrepreneur-with-great-influence-1.1931144. Accessed 16 Jan. 2025.

“Power Corp of Canada.” Forbes, www.forbes.com/companies/power-corp-of-canada/. Accessed 16 Jan. 2025.

“Power Corporation of Canada—Company Profile, Information, Business Description, History, Background Information on Power Corporation of Canada.” Reference for Business, www.referenceforbusiness.com/history2/5/Power-Corporation-of-Canada.html. Accessed 16 Jan. 2025.

“R. Jeffrey Orr.” The Globe and Mail, 18 Feb. 2020, www.theglobeandmail.com/business/adv/appointmentnotices/article-r-jeffrey-orr. Accessed 16 Jan. 2025.