Cossette is officially a Québécois company again after Chinese communications company BlueFocus sold a 60% stake to Caisse de dépôt et placement du Québec (CDPQ) and private equity firm CVC Capital Partners.

The deal, which was announced Tuesday, includes about 2,500 employees across three agency groups: Vision7 International (which includes Cossette, Cossette Media, Eleven and Citizen Relations), London, U.K.-based We Are Social, and San Francisco-based FuseProject.

The new marketing communications group will be headquartered in Québec City and led by V7’s current president and CEO, Brett Marchand.

The deal reportedly values the group of companies at $350 million, with CDPQ and CVC paying more than US$200 million for its 60% stake. BlueFocus will reportedly retain 35%, with senior management from across the group of companies holding about 5%.

Though it was started in Quebec and maintained an extensive presence there, Cossette has been owned by BlueFocus since 2014. That international ownership caused some controversy in the Quebec industry last year, when a government assignment went to the agency. Some suggested that government work should go to Quebec-based agencies rather than a Chinese-owned holding company. That will no longer be a problem thanks to Caisse de dépôt et placement du Québec (although some apparently believe it will mean even more government work for Cossette).

“CDPQ is very proud to take part in this transaction that will enable the creation of a new global communications and marketing group whose centre of expertise and headquarters will be in Québec,” said Kim Thomassin, the company’s executive vice-president and head of investments in Québec, in a release announcing the deal. “This investment aligns with our goal to support companies in their growth and globalization and will allow the company to carry out its ambitious development plan focusing on expanding in certain international markets.”

In the late summer of 2019, BlueFocus had a deal in place to sell its international agencies, including Vision7, to a U.S. company called Legacy Acquisition Corp that would have taken the businesses public in the U.S. At the time, the deal valued the entire enterprise at about $530 million, though that included Shanghai-based programmatic mobile experts Madhouse.

The deal was supposed to be finalized in March of 2020 but fell apart at the start of the pandemic when many of the investors pulled their money, said Marchand. “And so, it no longer made sense for us to do the deal with them… We started working on plan B, which was the deal we announced today.”

New ownership means new capital to fund growth and expansion for the companies, said Marchand. Speaking with The Message on Tuesday afternoon, he talked about the reasons behind the deal, why CDPQ and CVC will be good for business, and what happens next.

Why the change in ownership? In part the deal is rooted in geopolitical reasons, with concerns about working with a Chinese-owned company—concerns that were unfounded, stressed Marchand (more below). But more than that, it was about finding new capital to expand and evolve to meet the changes of consumers and the industry as a whole. “This digital transformation that we saw coming—and then it’s just had jet fuel thrown on it with the pandemic—has just made investment critical,” he said.

So what happens next?  The capital from the CDPQ and CVC will be heavily invested in new technology and data, and to fund expansion through either new offices for existing businesses (likely We Are Social) or through acquisition, said Marchand. The new entity has offices across 12 countries in North America, Europe, the Middle East and Asia-Pacific, but expansion will be focused on the U.S., he said.

Don’t private equity investors often like to cut costs? CVC is a very large private equity firm, but it has a record of holding onto investments for longer periods of time, said Marchand. “They are much less short-term focused because they care about the value of the company five or seven years down the road, not next quarter.”

That’s why the new company will have the green light to expand and upgrade its data and technology. “If you invest $10 million to build a new data and tech platform to help your clients, and that hurts your earnings in the short term, that’s tough to do as a publicly owned company,” said Marchand. “It’s much easier to do when you really care about what the value of that investment is going to look like five years from now.”

And CDPQ? Also a long term investor, said Marchand. One of its key interests is keeping investments and jobs in Canada, and Quebec specifically. “And they are particularly interested in Quebec and Canadian based companies that are succeeding internationally,” he said.

Was it important to be Quebec-owned again? “I think it’s more emotional than anything,” he said. The Cossette headquarters has always remained in Quebec, and most of its resources are there. While it shouldn’t have a big impact on the business itself, it has a big impact on how people feel about the business, he said. “The first message I got this morning when the announcement went out was from [longtime Cossette leader] Claude Lessard saying ‘Congratulations, what a big day. We’re back to Quebec.”

The problem of Chinese ownership: “BlueFocus has been a great partner,” he said. “They’ve let us run the business and we’ve done exceptionally well under their management.”

But too many people still assumed Chinese businesses were controlled by the Chinese government. While Marchand called it “completely unfair,” he said that lingering mistrust became problematic over time. “It gets in the way, because people are instantly suspicious,” he said. “Moving forward, if you are going to build data and tech as an important part of your business and your client work, it is not helpful to have people constantly asking the question: ‘Well hold on. You’re owned by a Chinese company, does that mean the China government has access to that same data and information?’ Which is not true, but the perception is there.”

What should we look for in the short term? There will likely be three key announcements in the not so distant future, he said. “One is we will announce some leadership at the corporate level, on our tech and data leadership. So we’re likely to go out and find a world class CTO. Two is we are likely to make a major acquisition in the U.S. And three, we’ll announce a new name. And it probably won’t have the word blue in it.”