Canadian pension fund sees Australia as 'quasi-Asian' play
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.
Frequently Asked Questions about this Article…
CPPIB has about $6.2 billion invested in Australia, which the fund says is roughly 3.6% of its global portfolio. The investor already considers itself marginally overweight in Australia and has signaled it would spend more if the right opportunities arise.
CPPIB calls Australia a “quasi-Asian” play because it gives access to Asian growth with fewer legal and regulatory risks than investing directly in some Asian countries. The fund cites Australia’s legal system, quality of management and business partners, scalable investment opportunities, and stronger economic growth than parts of North America and Europe.
CPPIB’s Australian holdings include the toll-road operator Intoll, Broadcast Australia and a range of property investments — from major developments like Barangaroo in Sydney to a half share of the Northland shopping centre in Preston, Victoria. It also has larger commercial property relationships with names such as Westfield, Goodman and AMP.
CPPIB is awaiting the NSW government’s $1 billion-plus sale of Port Botany, which was expected to be finalised in the June quarter. The article notes CPPIB is watching that sale as it plans further commitments in Australia, but it does not state whether a purchase has been completed.
CPPIB sees Australia’s plan to become “Asia’s food bowl” as a major long-term opportunity. The fund is interested in large-scale investments in water and port infrastructure as well as advanced agriculture and development — areas that position it to benefit from continued Asian growth.
While CPPIB is marginally overweight in Asia and wants to increase exposure, it flags legal and financial system concerns in some Asian markets as a disincentive. The fund believes China must be central to any Asia thesis but sees Australia as a way to capture Asian growth with fewer regulatory risks.
CPPIB’s five largest local equity holdings listed in the article are BHP, Rio Tinto, Commonwealth Bank, Westpac and ANZ.
Yes. CPPIB’s CEO, Mark Wiseman, said the fund is putting increasing focus on markets such as India — citing infrastructure deficits that present opportunities — and also points to growth markets like Brazil and Turkey. The fund also expects mergers and private equity activity in the US to pick up, making 2013 likely to be a robust year for transaction volume.
Call 1300 880 160
Start a chat
Schedule a call
