Alberta's pension fund manager has been approached by state-owned wealth funds from China to consider joining a bid for fertilizer giant PotashCorp, 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 Potash Corporation of Saskatchewan was not at the top of AIMCo's "hit parade," he admits "nothing is ever dead" when it comes to such deals. The proposed terms on the table are a non-starter, though.

Saskatoon-based PotashCorp has rejected the BHP bid and said other potential white-knight bidders have been kicking its tires.

Other funds approached

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 a run at PotashCorp.

But de Bever cautioned that talks so far had been "academic and preliminary" and no 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 the 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 will have a regulatory say on any sale of PotashCorp, a powerhouse in the Prairie province.