Canada’s biggest pension fund manager Canada Pension Plan Investment Board (CPPIB) could put substantial chunk of its funds earmarked for emerging markets in India, China and Brazil in the next five years.
CPPIB plans to put 33 per cent of its funds in emerging markets by 2025. India, China, and Brazil are big emerging markets for the fund manager, said Mark Machin, president and chief executive officer at CPPIB.
Currently, 2.5 per cent of its total assets ($10.6 billion) are in the country. It has total fund assets of $410 billion and plans to take it to $545 billion by 2025. About 23 per cent of its assets are in Asia.
CPPIB, which started investing in the country in 2009, has invested in Kotak Mahindra Bank, L&T Infrastructure Development Projects, online education firm Byju’s, energy company ReNew Power, logistics firm Delhivery, among others. It has set up joint ventures (JVs) with The Phoenix Mills and IndoSpace.
On the Andhra Pradesh government’s move to scrap power purchase agreements of the previous government and how it will impact global investors’ plans, Machin said the sanctity of contracts and the certainty of taxation are important for investors.
“The government has the right to review… We have to figure out the risks and compensate for those risks,” said Machin.
Suyi Kim, senior managing director and head of Asia Pacific, said private equity in the country has grown over the years. “When we started investing, there were very few $100-million deals, but now many such deals are happening in the market,” she said.
“There are a lot of opportunities here and huge investments are needed. We continue to put more in existing partners and find newer ones,” said Kim.
Vikram Gandhi, senior advisor to CPPIB, said the fund manager is working on entering private debt market in the country and it will invest in stressed assets as part of that.
On exit opportunities, Gandhi said: “We are happy with our portfolio. We have not seen anything bad happening for us to exit those investments or any situation where there is overvaluation of our assets for us to exit,” he clarified.
There is a lot of consolidation in the industry and they are working on tapping into the opportunity, said Gandhi.
Gandhi said the fund manager is also in talks with multiple firms to form partnerships to invest in rent-yielding commercial properties after the JV with Shapoorji Pallonji ended.
Machin said the fund manager has stayed away from residential real estate, as it cannot hold the residential assets for the long term like office or retail properties.