From left, André Desmarais, Paul Desmarais and Paul Desmarais, Jr. at the 1996 Annual Meeting of Power Corporation.

From left, André Desmarais, Paul Desmarais and Paul Desmarais, Jr. prior to the 1996 Annual Meeting of Power Corporation.

Positioning for Growth at Home and Abroad

Power Corporation entered the 1990s with a solid cash position and was debt-free. It maintained its prudent approach, especially in the face of unsettled economic conditions.

In Europe, the Corporation continued to build upon the investment it had made in 1981 in Pargesa Holding SA, a Swiss firm, when Pargesa acquired the non-French assets of Compagnie Financière de Paris et des Pays-Bas (commonly known as Paribas). Pargesa sought to increase its equity in a small number of high-quality, diversified companies positioned to become global leaders in their respective markets.

At the same time, Great-West Life’s wholly owned subsidiary Great-West Life & Annuity Insurance Company emerged as a U.S. leader in employee benefits and retirement products. In Canada, meanwhile, Great-West Life and Investors Group became the largest companies in the Canadian domestic life and health insurance and mutual fund distribution industries, respectively.

The company also expanded its investments in communications and worked at solidifying the special, ongoing relationship with China that had begun in the late 1970s. 

Going into the 1990s, with a solid cash position and debt-free, Power Corporation was prepared to seize new opportunities, but was in no rush to do so. “We have examined a number of investment proposals,” it stated in its 1989 annual report, “but, due to the unsettled economic conditions that have existed, we have chosen not to commit a substantial amount of our funds to long-term investment at this time. We have invested our surplus funds in highly liquid money market instruments denominated principally in Canadian and United States dollars for the time being.”

The early 1990s saw the era of leveraged buyouts and while many proposals were made to Power on how its capital could be deployed, large debt structures were not consistent with the Corporation’s investment philosophy. Power therefore stayed out of the leveraged buyout arena.

Not that there weren’t some very important initiatives undertaken during this period. By early 1990, Power Financial held 25 per cent of the equity and 24 per cent voting interest in Pargesa. Pargesa and its affiliate Groupe Bruxelles Lambert (GBL) held substantial positions in some 16 European financial, industrial, energy, and communications companies. Its equity interest in six different and diverse financial institutions represented 55 per cent of its net asset value.

During 1990, Power Financial invested an additional $176 million in Pargesa and signed an agreement with the Frère-Bourgeois group to formally link their interests by transferring their holdings in Pargesa to Parjointco N.V., of which they each owned a half, resulting in control of Pargesa by Parjointco.

That historic agreement, originally scheduled to last for 10 years, was later extended to the end of 2014. In 2012, attesting to the stability of the relationship, the agreement was again extended to 2029 with provision for possible further extension. 

Shortly after the original agreement was signed, Paul Desmarais, Jr. moved with his family to Europe for several years to manage Power’s interests on a first-hand basis, to develop the partnership with the Frère-Bourgeois group and participate in the restructuring of the Pargesa group. From 1982 to 1990, he was a member of the Management Committee of Pargesa; in 1991, he was appointed Executive Vice-Chairman and then Executive Chairman of the Management Committee.

During the 1990s, under the joint leadership of Power Financial and the Frère-Bourgeois group, Pargesa’s strategy in Europe mirrored Power’s strategy in Canada 20 years earlier: it sought to divest itself of secondary investments, increase its equity in a smaller number of quality, diversified companies positioned to become leaders in their respective markets, put them in the hands of capable managers, and strengthen their balance sheets to keep them growing.

The pace of divestment, consolidation, and expansion never let up during the decade. The sale of holdings by Pargesa group companies in the course of this rationalization, including all of Pargesa’s affiliates in the banking and financial services industries, produced aggregate gains of over $2 billion and left the group with substantial cash and important positions by the end of the 1990s.

Pargesa secured majority control of Imetal S.A. (subsequently renamed Imerys), the minerals and construction materials group headquartered in France. Through a series of related transactions in 1999, the Pargesa group emerged as the largest shareholder with 3.4 per cent of the shares and three seats on the board of what was to become TotalFinaElf, the fourth largest integrated petroleum company in the world, later renamed Total. Meanwhile, Pargesa’s communications assets were combined with other industry assets and later sold. In addition, by amalgamating its assets in the utility sector, Pargesa created the foundation of what would become its current investments in GDF Suez and Suez Environnement Company. Pargesa would see its stake in Suez Environnement reduced by future transactions; in early 2015, GDF Suez was renamed Engie.

Additionally, Power Corporation embarked on several new initiatives in the communications sector. Starting in March 1993, it invested $204 million in Southam Inc., Canada’s largest daily newspaper publisher. That investment gave Power almost 19 per cent of Southam’s outstanding common shares (later increased to 21.5 per cent), three seats on the board, and a shared voting arrangement under a separate agreement with Hollinger Inc., Southam’s other major shareholder.


Desmarais’ Sons Assume Leadership

On May 10, 1996, at the Corporation’s Annual Meeting of Shareholders in Montréal, Paul Desmarais formally stepped aside as Chairman and CEO of Power Corporation. He continued to be Chairman of the Executive Committee of the Board and the controlling shareholder. Paul Desmarais, Jr. became Chairman and Co-CEO, while André Desmarais became President and Co-CEO. They would continue to build on the approach that had contributed to Power’s success in the past: an entrepreneurial mindset, a prudent risk management and a long-term perspective.


Paul Desmarais, Jr., left, and André Desmarais

However, long before taking over as Co-CEOs, the Desmarais brothers had initiated transformational change within Power Corporation though a number of transactions including the sale of Montreal Trust and the disposition of television, radio and newspaper assets.

The Desmarais brothers gradually built their own teams over a number of years so that when the time came for Paul Desmarais to step away from active management of the business, the transition would be seamless.

This transition was an integral part of Paul Desmarais’ succession plan. Paul Jr. and André were viewed as the natural successors to the leadership of the Corporation. Together with Robert Gratton, President and CEO of Power Financial, they would go on to drive the operating earnings and dividends of Power Corporation and Power Financial to record levels well into the new millennium.

Two senior Power executives were instrumental in this process: Michel Plessis-Bélair with his financial acumen and P. Michael Pitfield, with his extensive experience in business, government and academia. The new approach was defined by decision making based on team consensus rather than on a centralized approach. The team also set its sights on companies that could earn and sustain leadership positions in their respective fields. These decisions would define what Power Corporation is today.

The Honourable P. Michael Pitfield was elected to the Board of Power Corporation in 1985 and served as a Director of Power Financial Corporation, Great-West Lifeco and its major subsidiaries, Investors Group and Gesca Ltée. He retired from his Vice Chairmanship and the Power Group Boards of Directors in 2003. He was then named Director Emeritus of Power Corporation, a title which he continues to hold.

Michel Plessis-Bélair joined Power Corporation in 1986 and has served in a number of capacities during his tenure, including serving for 22 years as Chief Financial Officer of both Power Corporation and Power Financial. He continues to sit on the Board of several of the Corporation’s subsidiaries and is also Vice-Chairman of both Power Corporation and Power Financial. Mr. Plessis-Bélair is also a Trustee of the Desmarais Family Residuary Trust.

P. Michael Pitfield

P. Michael Pitfield

Michel Plessis-Bélair

Michel Plessis-Bélair

List of Officers and Directors

At his final annual meeting as Chairman and Chief Executive Officer in 1996, Paul Desmarais presented to shareholders some statistics which summarized the amount of growth that had taken place since he came to Power in 1968. Corporate assets had increased from $165 million to $2.7 billion; net earnings had increased from $3 million to $209 million; and the market value of the Corporation’s shares had increased from $61 million to $2.6 billion, representing a compound annual return of 16.4 per cent.


Even as he advised shareholders of the Corporation’s remarkable growth, he made clear he had not acted alone. “My life at Power has been a truly extraordinary experience for my family and me. During the 28 years that I have served as Chairman and Chief Executive Officer, I have received the support of many outstanding people, some who are with us today, others who are not. All have made an exceptional contribution to the impressive story of Power. On this special occasion, I applaud our team – then and now.”

He then went on to talk about his great debt to his country:

“My profound attachment to Canada stems from the great liberty and freedom that my ancestors were able to enjoy in building their lives in a new country, the same liberty and freedom which allowed me as a young French Canadian from Northern Ontario to realize his dream in building a business in all parts of Canada and abroad.”

Divesting Southam and Share Buyback

Power and Hollinger worked together to solve the problems of Southam’s declining circulations and heavy debt, but it had become increasingly clear that the company would benefit from a major restructuring of its assets and focused shareholder leadership. After a committee of independent directors rejected a proposal designed to accomplish both objectives, the new executive team at Power took its first bold move and had the company sell its entire stake in Southam to Hollinger in 1996 for $294 million, a pre-tax gain of $75.2 million. 

The proceeds were almost immediately applied toward the $326 million purchase and cancellation of 17 million Power shares held by Paribas, an anti-dilutive move resulting in a 13.5 per cent reduction in the number of Power’s outstanding participating shares. This was seen as a substantial move by the new executive team at a time when share buybacks were not common and certainly not for such a large volume of shares, and laid the groundwork for the accelerated earnings growth in the years to come.

Power was delivering a clear message: the best use of its capital was to reinvest in itself by reducing the number of shares outstanding and strengthening its financial position.

Power Broadcasting, a wholly owned subsidiary of Power, formed a joint venture with the Canadian Broadcasting Corporation to launch two program services for distribution by cable and satellite in the United States and, in 1995, it joined Hughes Aircraft Canada in an attempt to establish a new satellite-TV service for the Canadian market. The disposal of Power Broadcasting’s Canadian radio and television assets in 1999, at a substantial profit, paved the way for future growth. 

Great-West Lifeco Makes Acquisitions

In the mid-1990s, the financial services sector in Canada was heading into a period of significant consolidation. A very important decision was made by Power: to be a leading participant in the consolidation process. To do this, Power needed to commit future capital to fund its strategy. In the ensuing years, Power would acquire such top brand companies as London Life, Mackenzie Financial and Canada Life. It was also during this period that Power Corporation transitioned from a purely entrepreneurial structure to a more team-based approach, with a partnership ethos.


The imposing façade of the London Life building in London, Ontario.

In the second half of 1997, Great-West Lifeco, with the support of Power Financial and Investors Group, paid $3 billion in cash and shares to buy 100 per cent of London Insurance Group, which in turn owned almost all of London Life Insurance, a distinguished Canadian company with an outstanding reputation and the largest exclusive life insurance sales force in Canada. Though it was highly unusual for a Power group company to initiate an uninvited takeover, particularly in the wake of a formidable bid by the Royal Bank of Canada, the deal was a very important step in the group’s growth. It was the first manifestation of Power’s strategy to be a leading participant in the consolidation of the financial services industry.

Great-West Life was strong in group benefits, disability insurance and individual life insurance policies. London Life, through its Freedom 55 Financial™ division, offered its own brand of investment, retirement and life insurance for individuals.

The acquisition introduced substantial marketing synergies and cost savings. It made Great-West Canada’s largest life and health insurance company. Power’s strategy was to acquire businesses and actively manage them to obtain operational efficiencies with increased scale while maintaining their distinct brand and sales organizations. Given successive acquisitions, Power was able to leverage the complementary distribution channels of its subsidiaries to create a distribution and product framework with unmatched breadth and scale.

Focusing On U.S. Niche Markets

Coincident with its Canadian expansion, Great-West’s wholly owned subsidiary Great-West Life & Annuity was focusing on two important U.S. niche markets: employee benefits, including health care, for small- to mid-sized businesses, and retirement products for employees in the public/non-profit sector. 


Great-West Life’s first foray into the United States:
the opening of
the U.S. marketing office in Denver, on
October 31, 1973. From left to
right: Jim W. Burns,
Peter D. Curry, Colorado Governor
John Vanderhoot,
and Mayor William McNichol.

Great-West Life’s activities in the United States date back to the beginning of the 20th century, but they were not treated as a separate entity until much later. It was in 1979 that the formal process of splitting U.S. and Canadian operations began. In 1982, Great-West Life purchased a company that it later named Great-West Life & Annuity Insurance Company, and the transfer of its U.S. operations to its U.S. subsidiary was completed in 1992. 

In 1998 and 1999, Great-West Life & Annuity further expanded its market position in the United States by acquiring the group health businesses of Anthem Health & Life Insurance Company, Allmerica Financial Corporation and General American Life Insurance Company. Following these transactions, the number of Americans covered by the company’s health and retirement plans exceeded 4.6 million. 

Forging Progress in China

Though it sold its interest in the Castlegar pulp mill in 1992, Power continued to develop investment opportunities with CITIC and contacts in Asia. Power Pacific Corporation, created for that purpose, opened offices in Hong Kong in 1994 and in Beijing in 1998. It soon joined with CITIC in the development of industrial real estate in the special economic zone of Pudong outside Shanghai and entered into a partnership with Bombardier Inc. and China National Railway Locomotive and Rolling Stock Industry Corporation (LORIC) to manufacture passenger rail cars in China.

In the late 1990s, the Chinese rail car manufacturing facility, owned by Power, Bombardier and LORIC, was awarded the first of many major orders for inter-city passenger vehicles. The order enabled the joint venture to go forward (the joint venture was subsequently sold in 2007). More significantly, Power acquired an equity interest in CITIC’s publicly traded conglomerate CITIC Pacific Limited, based in Hong Kong (the investment was subsequently sold in 2015). After years of relationship building with Chinese government officials and businesspeople, Power’s patience was bearing rewards.

Marking 75 Years

By the time of its 75th anniversary, and the end of the century, Power Corporation had become a truly international company, with strong and diverse holdings in Europe, the United States, Canada, and Asia. Net earnings amounted to more than $500 million and the market capitalization of its subordinate voting shares exceeded $4 billion. Consolidated assets stood at over $57 billion. More importantly, it had passed smoothly into the hands of a new generation of business leaders who shared the vision and dynamism of their father.

List of Officers and Directors

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