Canadian pension fund sees Australia as 'quasi-Asian' play

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 risks.

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 its half share of the Northland centre at Preston, Victoria.

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.

It has $6.2 billion invested here, or 3.6 per cent of its global portfolio, but 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", chief executive Mark Wiseman said, citing interest in "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," Mr Wiseman said.

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 those of North America and Europe.

The investor is "marginally overweight" in Asia and would like to invest more in the region, but says 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 Australia with its high correlation to Asian growth helped to achieve that target, he said.

And new markets such as India could not be 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 did not.

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

Of the US market, Mr Wiseman said "we see [mergers and acquisitions] activity in general and private equity investment activity picking up ... 2013 will be a reasonably robust year for private equity activity ... in terms of transaction volume."

CPPIB's five largest local equity holdings are BHP, Rio Tinto, Commonwealth Bank, Westpac and ANZ; it has larger commercial property investments with the likes of Westfield, Goodman and AMP.

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