Canada Pension Plan Investment Board (CPPIB) wants to invest more in India in asset classes such as private credit and private equity, the pension fund’s president and chief executive officer Mark Machin said on Wednesday.
Since making its first investment in India in 2009, CPPIB, Canada’s largest pension fund, has invested close to C$6 billion in India.
The Toronto-based pension fund invests across classes such as public equities, private equity and credit, infrastructure and real estate. As of 30 September, CPPIB had net assets of C$328.2 billion.
“We would love to invest more in credit, if we can find the opportunities. I would love to see more invested here. We also want to do more private equity, through working with our partners here and through direct opportunities,” Machin said in an interview in Mumbai.
On the private equity side, CPPIB has investments in homegrown private equity funds such as Renuka Ramnath-led Multiples Alternate Asset Management and True North (earlier known as Indian Value Fund Advisors).
Machin said that from a sector perspective, in India the pension fund is keen on investing in opportunities that tap the consumption story.
“In India, which has a huge rising middle class, we would like to invest in financial services, education, healthcare, retail and things related to consumption and the rising power of the middle class consumer,” he said.
The Canadian pension fund has invested almost C$1.5 billion in India in the last one year. In January, it acquired a 48% stake in GlobalLogic Inc. from Apax, and in March a 3.3% stake in Bharti Infratel alongside PE firm KKR.
This year, CPPIB announced a joint venture to develop and own malls with Phoenix Mills Ltd and another with IndoSpace to own and develop logistics facilities.
“It was only in 2015 that we opened in India and so we have had a team on ground. These transactions take a long time and this requires building partnerships. The seeds have been sown for the last two to three years and it’s now getting deployed. Having an office here and partners who understand the business is serving us really well,” said Machin.
Machin added that there is better appreciation of the long-term capital that a pension fund like CPPIB can provide and a change of perception that pension money is cheap money.
“There is a growing understanding that we are reasonably sophisticated investors, that it’s not free money. We are looking for good risk-adjustable returns. There is less of people seeing it as flood of money that is cheap. We can make complex and substantial investments for the long term, but long term does not mean cheap money or low returns,” said Machin. While it has invested significant amounts lately, the pension fund is keen to invest more in India going ahead as it remains bullish on the long-term prospects of the country’s economy.
“The good part about India is the substantial long-term economic growth. There is so much upside, so many opportunities,” he said.
However, Machin cautioned that writing more and larger cheques is a function of finding the right partners and the right opportunities.
“The limiting factor is firstly to find the right partner. Even when we make a public equities investment we think of it as a long-term partnership or relationship. Second, is to find the right scale of investment and third is to find the right valuation. If we can find those three things then we will make substantial investments,” Machin said.
Source: Mint