$6.2 billion stake, but Canadian fund wants more of Australia

With an exposure topping $6 billion it is already overweight in Australia, but one of the world's largest pension fund investors, the Canada Pension Plan Investment Board, wants to invest more.

With an exposure topping $6 billion it is already overweight in Australia, but one of the world's largest pension fund investors, the Canada Pension Plan Investment Board, wants to invest more.

It views Australia as a "quasi-Asian" investment play, giving it access to Asian growth without the legal or regulatory risk.

CPPIB already owns toll-road operator Intoll, Broadcast Australia and a swag of property investments that span the Barangaroo development in Sydney, to shopping centres such as a half-interest in Northland Shopping Centre at Preston.

While it awaits the $1 billion-plus sale of Port Botany by the NSW government, which is to be finalised in the June quarter, it has earmarked Australia's agricultural sector for funds as it positions itself for continued growth in Asia.

With $6.2 billion invested here, or 3.6 per cent of its global portfolio, CPPIB is happy to spend more.

In particular, Australia's plan to become Asia's food bowl "represents a huge opportunity for long-term investors like us", said chief executive Mark Wiseman, requiring "large-scale investments in ... water and port infrastructure, not to mention in advanced agriculture and development".

"If the right opportunities present themselves we absolutely will commit additional funds to Australia."

He said the attractions of investing in Australia included the legal system, the quality of management and business partners, the availability of scaleable investments and economic growth rates better than north America and Europe. The investor is "marginally overweight" in Asia and would like to invest more in the region, but concerns over legal and financial systems can be a disincentive.

"We have to be where the global economy is going to be 15, 25, 50 years out," Mr Wiseman said. "China has to be at the core of our investment thesis for Asia ... The reality is it's hard work."

Being overweight in Australia with its high correlation to Asian growth helps achieve that target, he said. And new markets such as India can't be ignored.

"We've invested relatively little to date, but it is a country where we're putting increasing focus," he said, pointing to India's "infrastructure deficit" which presents opportunities for CPPIB, unlike China which does not.

"India's a place where we see substantial opportunity," Mr Wiseman said, while pointing also to Brazil and Turkey as growth markets.

"We see M&A activity in general and private equity investment activity picking up," Mr Wiseman said of the US market. Its five largest local equity holdings are BHP, Rio Tinto, Commonwealth Bank, Westpac, and ANZ, although it has larger commercial property investments with the likes of Westfield, Goodman and AMP.

InvestSMART FORUM: Come and meet the team

We're loading up the van and going on tour from April to June, with events on the NSW central & north coast, the QLD mid-north coast and in Perth, Adelaide, Melbourne, Sydney and Canberra. Come and meet the team and take home simple strategies that you can use to build an investment portfolio to weather any storm. Book your spot here.

Want access to our latest research and new buy ideas?

Start a free 15 day trial and gain access to our research, recommendations and market-beating model portfolios.

Sign up for free

Related Articles