1.9°C Cloudy 
CALGARY - Alberta's pension fund manager has been approached by state-owned wealth funds from China to possibly join a bid for fertilizer giant PotashCorp. (TSX:POT), but it said Thursday it intends to stay on the sidelines for now.
Alberta Investment Management Corp., or AIMCo, can't justify participating in a bid to rival the US$38.6-billion that Australian mining giant BHP Billiton has offered for the world's largest potash producer.
"We can't, right now, make the economics work," Leo de Bever, AIMCo's chief executive, told a Calgary news conference as the fund manager released its annual report.
"It's very hard for pension funds to get involved in any kind of motive other than economic return."
While de Bever said a move on PotashCorp was not at the top of AIMCo's "hit parade," he admits "nothing is ever dead" when it comes to such deals. The terms on the table currently are a non-starter, though.
Saskatoon-based PotashCorp has rejected the BHP bid (NYSE:BHP) and has said other potential white-knight bidders have been kicking its tires.
De Bever said in a later interview that AIMCo and other funds had been approached by brokers looking to connect Chinese partners with Canadian players, with an eye to taking some kind of run at PotashCorp. But de Bever cautioned that talks so far had been "academic and preliminary" and that no actual negotiations had taken place.
Chinese state-owned companies have topped the list of potential parties that could launch a rival bid. To a lesser degree, there has been speculation that Anglo-Australian Rio Tinto PLC or Brazil's Vale could enter the fray.
Generally in these situations, a foreign bidder may seek "local cover" from pension funds to make the bid more "palatable," said de Bever.
For instance, a Chinese firm may line up financing from AIMCo, or other fund managers like the Canada Pension Plan Investment Board or Ontario Teachers pension fund to help smooth the way.
De Bever said the idea of getting involved in PotashCorp for political reasons makes him uncomfortable.
"If I were to do that, I would be getting involved in a very dangerous game, where I mix economics and politics. That's not my place," he said.
"From an economic standpoint, getting into a bidding war with BHP is probably not the best way to deploy our capital."
Ultimately the federal and Saskatchewan governments would have a regulatory say on any sale of PotashCorp., a powerhouse in the Prairie province.
On Thursday, Saskatchewan Energy and Resources Minister Bill Boyd said his government had asked for an independent analysis of the proposed takeover.
"No matter who owns the potash mines, the people of Saskatchewan own the potash," Boyd said in a statement.
"It is our job as government to protect the best interests of Saskatchewan people and to be sure the province and Saskatchewan residents receive the maximum benefit from this valuable resource."
The Conference Board of Canada, an Ottawa-based think-tank, will look into the "risks and opportunities" a potential deal presents, and will outline what governments can do.
The report should be made public by the end of the month, and will be used as a basis for Saskatchewan's submission to the federal government, which must approve the deal under the Investment Canada Act.
De Bever said there has been no political pressure to join a rival bid per se, but that there has been "musing" from some "armchair" observers that a Canadian investor ought to get involved.
For now, he said, AIMCo is much more focused on investing in firms with strong underlying businesses that may have run into financing trouble during the recession. It also wants to explore investments in infrastructure, and ways to capitalize on growth in Asia and South America.
In its annual report, the Crown corporation said its total fund return for the year ended March 31 was 12 per cent.
Going forward, it said, it will base its investment strategy on the assumption private equity spending may not pick up for some time after last year's deep recession.
"Recovery was, to a large extent, fuelled by expansionary fiscal and monetary policy," the report said, referring to the hundreds of billions of dollars in stimulus spending by the U.S. and Canadian governments to fight the recession.
"The question now is how soon increased private spending will allow public stimulus to take a back seat."
AIMCo is one of Canada's biggest institutional investment fund managers. It handles $71 billion in pensions, endowments and other funds on behalf of Alberta public sector clients.
