The head of Canada's most storied pension fund wants rivals to be partners as debt-laden governments offload assets, and says a recent bid with two other pension funds for the nation's leading stock market operator is a good start.

The longest journey begins with a single step, Michael Sabia, chief executive of the nearly 50-year-old Caisse de depot et placement du Quebec, told Reuters in an interview from its headquarters in the francophone city of Montreal.

The Caisse and three other pension fund administrators joined forces with some of Canada's largest banks to bid for TMX Group (X.TO: Quote), owner of the Toronto Stock exchange.

The C$3.8 billion ($3.72 billion) deal still requires regulatory approval, but it shows a shift in mindset for funds that in the past rarely worked in such large groups.

It's a process. ... You start with small stuff and then you do slightly bigger stuff and then people start phoning each other and they learn that having dinner together is a good idea. That's how it works, said Sabia, one of Quebec's best-known business leaders.

Sabia, described as a workaholic by his staff, exudes zen-like serenity as he looks out over the city from Caisse headquarters on the edge of Montreal's Old Town.

The way it has to work is that organizations have to learn to work together, said Sabia, who joined the Caisse after serving as chief executive of BCE, parent of Bell Canada.

Canadian pension funds emerged from the 2008-09 economic crisis as some of the biggest players on the world stage, second only to sovereign wealth funds in size. The top five funds manage more than half a trillion dollars in assets between them, giving them the heft and focus to acquire the massive infrastructure projects hitting the market.

Nobody wants to deal with a fund that says, 'Well, I'm in for 25 million,' said Sabia. You've got to be in for 250, 500, 600 million dollars.

Funds such as the Caisse could swallow many an infrastructure project whole, regardless of the size, but few would want to shoulder such risks without strong partners.

We are talking about areas where we can cooperate or do some things between the various funds, said Sabia, who occasionally slips into French, and refers almost reverently to his employer as La Caisse.

He said the fund is working on at least one deal with another large Canadian fund, but would not give further details.

We'll be able to do some club deals among the Canadian pension funds, that is something that we are very interested in doing.

CHAPTER TWO

Having brought the Caisse de depot et placement du Quebec back from a C$40 billion loss in 2008, Sabia is realigning strategy again, a fresh push that he calls Chapter Two.

The C$152 billion pension fund will hire more talent to develop the kind of expertise in other asset classes beyond the one that helped it build one of the world's largest real estate portfolios, worth C$40 billion at last count.

We need to build, and we are, similar capabilities in operations associated with infrastructure, said Sabia. We need to understand what makes for good operations of a pipeline, of an airport.

In November the Caisse announced an $850 million deal to buy ConocoPhillips'(COP.N: Quote) 16.55 percent stake in Colonial Pipeline Company, the largest refined petroleum products pipeline in the United States.

That came barely two months after it spent 210 million euros ($268.74 million) to double its stake in the European gas infrastructure company Fluxys G.

($1 = 1.0206 Canadian dollars)

($1 = 0.7814 euros)

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