On this week's #SpotlightSaturday, read more about former QUAAF member Bert Chen and his experience as our Chief Economist, eventually leading him to his role at Brookfield Renewable. While also involved in making a change through Canadian politics, Chen was a key asset in the CNOOC / Nexen oil and gas transaction. Read more to learn of his experiences and learnings along the way, and how QUAAF & Queen's provided the background skills critical to his success.
Tell us about your background before your Master’s degree, and your current role at Brookfield?
For sure. So before doing my MBA I worked in the regulatory field and development / permitting field, first for energy projects in western Canada and transitioned to real estate development in Vancouver. I had a political science background, so it made more sense to focus on the regulatory side of things, but as I got into real estate development and asset management overall, I realized that I needed more of a stronger, quantitative education. So, I chose to get an MBA and specialize in finance and that’s how I saw that QUAAF was a great opportunity to understand equities and trading. During my time in QUAAF, I started off as a Director of Economic Research and then we expanded the team. I ended up taking on the title of Chief Economist and I bridged my background between the regulatory policy side, looking at regulatory affairs and overall economic indicators, and macroeconomics into something that could be friendlier for equity research. Then afterwards I went to Brookfield. I started off in a rotational program at Brookfield Renewable, which is the division of Brookfield that looks after power generation in North America, as well as around the world. And now I’m leading our development efforts on M&A and greenfield projects in Canada.
Was the role in Brookfield what you were expecting given your education experience at Smith and how was it translating your QUAAF experience to that real-life role?
I think the first part, the expectations about coming here, yes it matched in terms of the asset that I would be working with. Renewable energy is pretty specialized in terms of the kind of assets you’re dealing with and considering how diversified Brookfield is we’re very much siloed in the asset class that we work with.
My background played very well into what I deal with on a daily basis, especially when we look at due diligence on projects and portfolios, especially entering new provincial markets or new countries. Because of how regulated and tightly controlled this industry is, looking at the major economic factors was very important. For example, the impact of carbon pricing in Canada has a lot of ramifications for the entire renewable energy space because it basically adds value in terms of revenue streams that didn’t otherwise exist. Physically, it’s not a real product. It’s purely regulatory-based and backed by the rule of law. That’s the backbone of everything that I do now, because renewables are so tightly regulated.
What drew you to QUAAF, and to Queen’s in general when you were choosing your master’s?
I chose Queen’s because, one – it obviously had the one-year program, and I liked the small class size. I like the collaborative spirit that it’s known for, so that’s really what drew me to Queen’s. I was living in Vancouver before I realized I wanted to come back to Ontario.
When I got into QUAAF, it was just the full-time MBAs and the MFINs, and we would alternate for 6 months of the year as to which executive team led it. For us it was very much going into the latter half of the year, and my friends were all interested in QUAAF, and were much more on the financial side even more so than I am now. We were ambitious and saw an opportunity in the fact that past performance wasn’t necessarily great, and that it was really time for us to make short term tactical plays. Back in 2017 in the program, VIX was something everyone was talking about, and that was something we really focused on was looking at volatility trading. I don’t think we actually executed it, but it was something that we actively looked at and something that I would report on a regular basis.
You did an exchange program in Japan. Tell us about that. When you came back to Canada, looking back, were there any resonating moments from your time in Japan that stuck with you? Are there any learnings from there that you applied at Brookfield?
I was lucky to be the one student to get exchanged with Waseda University for the MBA program. And that was, everything I expected when I found out what the program was like. It was very intensive. The days were basically fourteen hours long. I’d have two classes a day and each of those classes would go on for five hours. I did log in some travel and, as well, some time afterwards with some classmates from UCLA, and ended up being there in total for three weeks.
The classes that I took were marketing and design, and the other was an operational-focused strategy course. The two professors were Japanese American, and they also teach in the U.S. The focus was on the Japanese way of doing business, which is so very different from how we do in North America. We throw out terms in business like kaizen, but there they really, really believe in it. It’s not just a thought, it’s a philosophy that they build their lives around.
From a financial perspective, we hear about really low interest rates, almost negative interest rates in Japan and the impact it has on the economy. It really transfers to my role at Brookfield because the lenders that we go to for a lot of project financing are the Japanese banks. And it makes total sense that they are able to offer a lower cost of debt, just because their discount rate is so low based off of what they can get in their home markets. When you start putting that perspective on things, and you realize it’s tough to be competitive as North Americans when Japanese, even European investors, have such a low return threshold.
What would your advice to current QUAAF members, or any Queen’s Master’s students in general, on how to make the most of their time here at Smith?
One, definitely take every opportunity you can get, whether it’s an exchange, whether it’s extracurriculars, whether it’s networking opportunities. Because it’s all right there easily accessible, and you’ll never get a chance to get a lot of those opportunities again, especially once you graduate. And with QUAAF it’s just a great learning experience. I’ll sum it up as it’s probably the one time in your life you’ll manage a portfolio other than your own where you won’t have KPIs and worry about competitive returns. It’s really a time to learn in a sandbox but with a substantial principal and a good team to support you with.
You were a part of the biggest cross-border oil and gas deal this country’s ever done, the CNOOC / Nexen transaction. Tell me all about that experience.
I was right up there until the close. Because it was such a large deal, there’s the Investment Canada Act which says that authorities could reject a project if it was proven not to be of a net benefit to Canada. There were a lot of concerns from the general regulatory realm that a Chinese stated-owned enterprise was buying a significant stake into the oil sands, which you could arguably make a case for being a strategic industry. That’s what we focused on, educating stakeholders that this may or may not be a benefit to Canada. Just because an owner is coming in that’s from another country does not mean that they’re going to not respect the rules, laws and regulations of this country, particularly when it comes to environmental regulations, First Nations, and stakeholder consultations. It wasn’t necessarily a quantitative role at that point, but definitely played a key part on the policy side.
We want to ask for your view on the renewable energy sector. Brookfield has hydro, wind and solar assets. Could you compare and contrast the three, what challenges, both in terms of the technology and in terms of policy, are we seeing in terms of getting Canada to adopting renewable energy?
To speak about all electricity in general you have to understand the supply and demand aspect of it. Electricity is probably the one product where the rules of pure economics in terms of supply and demand need to always be in balance. The reason for that is because you can’t really store electricity other than with batteries and they’re such a small market and purely an emerging technology, that we’re also involved in, but because it’s otherwise pure supply and demand forces, your sources of generation are responding to whenever somebody turns on a lightbulb or plugs in a machine.
Electricity is generated off your marginal cost. Hydro has a very low marginal cost because you’re just using running water – compared to other sources like oil, which is quite expensive for the amount of electrical energy that’s produced. Solar and wind have no marginal cost. However, they have a very high capital cost. So it really depends on what you look at in terms of if you’re a market player based off an actual capitalistic sense rather than if you’re a public utility owned by the state that’s doing it out of a public service. Do you want upfront high capex cost, with no opex on the fuel side, or do you want to have a bit lower capex but pay it out in terms of your opex? That’s what really differentiates the technologies.
What are some best practices or personal habits that you have always consistently had that make you more better performing or just more successful?
One – punctuality. Always be on time. You got to get up in the morning, you got to sleep at some reasonable hour, because otherwise it will catch up to you. That’s number one. Two – is be good with time management. As you get busier professionally, you know for myself I have this day job, I’m also involved volunteering on a political board, and then personal life and then managing my other investments. You just really got to allocate your time properly and learn to juggle lots of things.
The last one is to always keep informed. All these different things that I do, they cross pollinate. For example, my political involvement gives me access to a lot of politicians. For example, I was having dinner with Doug Ford last weekend and we ended up talking about electricity rates. Keep your mind open and the networking really pays off, even if it doesn’t seem like it’s a direct linear relationship what you’re doing at the time, it’ll all still evolve at some point.
How did you get involved in the political sphere?
It’s a continuation of my background in politics. Canada is one of those countries where you can have politics as a hobby, we’re lucky enough to have that. But also because it’s so high-stakes, you’re either fully immersed into it, or you’re completely on a kind of periphery side of it. And I wanted to maintain those connections, so I always kept up those relationships. When the opportunity came there was a vacancy for basically a directorship on the Conservative Party’s national counsel. I took a stab at it and just was lucky enough to win being elected to it and now I’m just plugged into all those discussions that are being had. Whatever it is that interests you, go for it. You’ll need that passion to keep yourself motivated and participating in it because it’s hard to do so when it’s not necessarily generating an income.
It’s not hard to get in. All you have to do is just join and start attending events, and it’s all relationship based. But people are accessible and are generally open to the public, and that’s a great thing about our country.
How can we as individuals, or in our companies, move the needle to make impact at scale? Do you think that has changed for you through different ages as you’ve tried to go up the ladder?
I’ve put a lot of thought to this in many ways and I think the ultimate thing is we should take a very long-term perspective. I don’t want to sound morbid here, but when we’re all 80 or 90, and preferably no longer working nine to five, and just riding out retirement, your lifestyle is going to be very different and your philosophy on life is going to be very different than at our age. Everything we do now should ultimately lead to that point in our lives. And, you know, being a billionaire sounds great at a younger age, but do you really need all that money when you’re retired? Because you see all the billionaires, they’re giving it away. And it just changes your philosophy because you’re holding yourself more accountable and responsible, you’re not going to short end a deal because in the long run that will catch up to you because in the long run you will only have your name and reputation and what people think of you.
As you mature your outlook on marginal things becomes less petty. For example, when you’re younger a 10 percent raise sounds awesome, you’re really fighting for it, but if it’s only five percent you realize it’s all marginal because in the end what does that really mean, right? I think it does put things in perspective. You start looking at things from a wider perspective. Maybe we were used to pushing ourselves to work eighteen hours a day, but that catches up to you. We have our whole lives to make up for that time.
Maybe we were used to pushing ourselves to work eighteen hours a day, but that catches up to you. We have our whole lives to make up for that time.