CPP Investments wants a bigger pie in Indian equities, credit markets

The Canada Pension Plan Investment Board or CPP Investments - Canada's largest pension fund manager - will increase its presence and investments in Indian equities and credit markets, it said in the latest annual report released on Thursday.
 
“Building on the progress made in 2020-21 (FY21), active equities (AE) will focus its efforts to increase exposure in emerging markets (EMs) by expanding our presence and investment capabilities in India,” CPP Investments said in Its FY21 annual report.
 
Its AE department invests in public equities across the world.
 

As part of its 2025 strategy, the AE department continued to grow its exposure in EMs. In particular, Fundamental Equities Asia (FEA) increased its focus in the Indian market through the hiring of a senior portfolio manager to lead its India strategy, it said.

 
It added that FEA delivered another year of outperformance relative to broad equity markets and was the top contributor to AES result in FY21 with net income of C$1.2 billion. Assets under management were C$25.2 billion, compared to C$20.3 billion last financial year, with a notable increase reflecting the portfolio company’s gains, it said.
 
 “While markets in Greater China and India surged this year, FEA delivered outperformance with high-conviction investments generating significant gains,” it said.
 
CPP Investments invested C$128 million in the National Stock Exchange of India and invested $100 million for a 2.3-per cent ownership in Hutchison China MediTech, a Chinese biopharmaceutical company.

 
During the year, its APAC Credit arm continued to expand the portfolio’s footprint in India,  deploying $0.1 billion across the region on a gross basis, it said.
 
APAC Credit invests primarily in China, India, and Australia.
 
It committed Rs 725 crore ($98 million) to a bilateral  financing transaction to support a strategic investment in BMM Ispat by India-based JSW Project.
 
CPP Investments said it it will continue to strengthen and build local partnerships in EMs.
 
Its also committed $ 250 million to Baring Private Equity (PE) Asia’s  India Credit Fund III as a cornerstone investor to the Credit Fund III, and to a Credit Fund III overflow vehicle.

 
 At year end, APAC Credit assets totalled $1.1 billion, compared to $1.3 billion at the end of 2019-20. The decrease in the portfolio primarily came from $0.6 billion of dispositions (including maturities and redemptions).
 
APAC Credit earned a net return of 8.1 per cent, or $0.1 billion, of net income, in FY21.
 
CPP Investments said it looks to deepen local market expertise and networks in Greater China and India, and build a local team in the Mumbai office to enhance deal origination efforts.
 
 “The majority of PE Asia’s investments were based in EMs, with $12.4 billion in Greater China, up from $8.0 billion in 2019-20 (FY20), and $2.1 billion in India, a slight increase from FY20,” it said.

 
 The PE Asia portfolio grew from $15.3 billion to $22.4 billion in carrying value during the financial year. The portfolio consists of $13.3 billion (or 60 per cent) in funds, $8.6 billion (or 38 per cent) in direct investments, and $0.5 billion (or 2 per cent) in secondary investments.
 
 Growth in the portfolio primarily came from $8.5 billion in valuation gains and $3.4 billion in new invested capital. This was partially offset by distributions totalling $2.8 billion and $2.0 billion in foreign exchange losses, it said.
 
“During the year, it selectively expanded its GP network by adding three new managers, committing $2.1 billion to funds in Asia and invested $0.9 billion across eight direct investments. Overall, PE Asia earned a net return of 43.5 per cent, or net income of $6.6 billion,” it said.

 
 About 24.7 per cent of Canada Pension Plan Investment Board or CPPIB’s investments in infrastructure are in EMs, primarily in Latin America and India,the Canadian investor said in the latest annual report released on Thursday.
 
 At the financial year-end, the Infrastructure portfolio consisted of 24 direct investments valued at $41.2 billion, compared with $35.1 billion at the end of FY20.
 
The growth in the portfolio was primarily the result of $4.2 billion in new investment activities, and $5.0 billion in valuation increases. This was offset by portfolio dispositions and distributions of $2.8 billion and $0.3 billion in foreign exchange losses, it said.

 
 The remaining 75.3 per cent of the portfolio is in developed markets such as North America, Western Europe, and Australia. Infrastructure investments represent 39.5 per cent of the real assets portfolio.    
 
 The real estate portfolio has 79 per cent in developed markets, such as the US., the UK, Canada, and Australia, and 21 per cent in EMs, including Greater China, India, and Brazil. More than 80 per cent of RE’s professionals are in CPP Investments’ international offices.
 
 “Chinese and Indian markets exhibited an accelerating interest in alternative capital as investors recognised value-creation capabilities in longer-term private equity partnerships to their portfolio companies,” it said.