The Canada Pension Plan Investment Board (CPPIB), one of the world’s largest pension funds, continues to see interesting opportunities in Asia, its second-biggest market, particularly in the technology and healthcare sectors.
In an exclusive interview with CNBC’s Martin Soong and Sri Jegarajah, CPPIB CEO and president Mark Machin said China and India are showing interesting opportunities across both the equity and credit side of the business.
Machin stressed that while digitisation has become massive for them globally as COVID-19 has forced people to stay at home, the adoption pattern is particularly interesting in this part of the world.
For instance, in education, one of the sectors that CPPIB is invested in, Machin said Asian consumers have already taken to it, while in the US and Europe it is still an emerging opportunity.
“The experience in Europe and the US on distance education and online education has been pretty poor. And I think that’s probably due to there being much more specialized companies dealing with it in Asia,” Machin said.
But since he sees digitisation as probably a five to 10-year acceleration process across many sectors as Machin expects more people to get used to online education.
About 85 per cent of CPPIB’s investments are outside Canada, with the US being its biggest market, followed by the Asia Pacific region.
“And that’s because our mandate is to be a global investor. And in fact, all the inflows we have in the fund come from Canada, so it makes sense for us naturally to hedge by having a globally diversified portfolio and that continues to diversify,” the fund’s head said.
CPPIB had a net asset value of about $305 billion as of March 31, 2020, according to an earlier announcement. The pension fund has built a significant presence in Asia through its investments in fund managers and regional businesses.
It has committed capital to general partners such as Sequoia Capital, Baring Asia, Hillhouse Capital, MBK Partners, and CVC Capital’s Asia buyout fund.
Meanwhile, its direct investments include large companies such as China’s Alibaba and Meituan Dianping, Delhivery in India, Indonesian toll road operator PT Lintas Marga Sedaya, and a joint venture with ESR to invest in Korea’s logistics real estate.
In the CNBC interview, Machin said CPPIB continues to put the effects of the pandemic under control because of the team and processes it was able to put in place ahead of time. The fund also has hired a dedicated chief risk officer.
“We had that information and all those leaders in place and we even had a financial crisis management team in place. We didn’t predict it would happen. But, you know, we prepared and activated that as soon as things became very volatile, so yup we have one. So far so good,” he added.