Foreign investments on rise as tech firms double down on Montreal

Even with the coronavirus pandemic raging on, Montreal managed to attract a record amount of foreign direct investments in the first half as several U.S. technology firms announced expansion plans.

Foreign companies invested a record $1.38 billion in the first six months of 2020, a 10 per cent climb from last year’s first-half tally, Montréal International said Friday. That’s the highest first-half total recorded by the economic development agency since its creation in 1996.

“We started the year with a very strong pipeline, and what you are seeing today is the result of this work,” Montréal International chief executive officer Stéphane Paquet said Friday in a telephone interview. “Still, if you had told me on March 13 that we were about to set a record, I would never have believed you.”

That project pipeline is a key reason why Montréal International expects to top $2 billion in foreign direct investments in 2020 for the fourth consecutive year. It drew a record $2.6 billion in 2019.

“If there’s no second wave of the pandemic, if we don’t go into lockdown again, we’re on track to reach or exceed $2 billion this year,” Paquet said. “And if we manage to land a big project, an ‘elephant’ as I call them, we’ll be well above that number.”

Companies with existing Montreal-area operations generated the bulk of the first-half total, or $1.15 billion, leading to a 31 per cent surge in reinvestments. They include U.S. tech giant Google, which opened a new office at 425 Viger Ave. West, and special-effects studio Digital Domain, which said in February it wanted to more than triple its Montreal workforce.

Also noteworthy was the decision by New York-based data analytics company Behavox to create an innovation and operations centre downtown capable of housing up to 400 employees. Behavox agreed to lease space at Maison Manuvie on De Maisonneuve Blvd. West — a $35-million commitment.

New arrivals include U.S. artificial-intelligence company Zesty.ai and TheGuarantors, a New York-based financial technology firm that develops insurance products and software for the real estate industry. Founder and CEO Julien Bonneville told the Montreal Gazette in May he was looking to hire about 15 to 20 developers this year.

While Canada’s borders remain closed, investment promotion activities are anything but idle.

Montréal International employees held 355 first-half meetings — many of them through communication platforms such as Microsoft Teams or Zoom — with foreign companies considering reinvestments, Paquet said. That represents a 53 per cent increase from the same period last year, and includes almost 200 remote conferences since the lockdown started.

“Even at a distance, we’re keeping busy,” Paquet said. “It’s fascinating to see how quickly people have adapted to working from home.”

And with Quebec’s economy having reopened in May, Montréal International staffers have seen investment prospection activities pick up in the last month, according to the CEO.

“Our phones have started to ring again,” Paquet said. “Companies are thinking about making investments once more. All we can hope now is that there is no second wave.”

Paquet, a former journalist who also spent time as head of the Quebec government office in London, was named CEO in December. He started Jan. 1.

While some investors — which Paquet didn’t name — are reconsidering capital plans, the CEO said he’s heartened by the results of a recent internal poll showing that six out of every 10 foreign companies with a Montreal-area presence expect to proceed with their planned investments. Twenty per cent of respondents said they would postpone their projects, while 7 per cent scrapped them.

Paquet is more cautious about 2021, given the difficulties involved in persuading companies to invest abroad at a time when global travel is severely restricted. An investment file at Montréal International typically requires 15 to 18 months of work before bearing fruit, the CEO said.

“All of the head-office visits in Seoul, Shanghai or Paris that we didn’t do this year will obviously have an impact on our 2021 numbers,” he said. “What kind of impact? It’s too early to say. It will depend on how soon we can hop on a plane again.”