Canada Eyes Record Book on Foreign Investments; Trend Driven by Pensions

Market conditions in Canada have spurred the country’s institutions, corporations and pension funds to add record levels of foreign investment assets to their books in 2015.

The growth in foreign assets has been led by the Canada Pension Plan Investment Board.

From Bloomberg:

Facing a commodities crash and anemic growth at home, Canadian companies and funds have added C$83.4 billion ($63 billion) of investment assets outside the country in the first nine months of the year, according to data from Statistics Canada. That’s more than double year-ago levels and on pace for a record year. The nine-month figures, released Monday, include a record C$48.7 billion in foreign mergers and acquisitions.

Easy credit, strong balance sheets, and lack of investing opportunities at home are the main factors driving Canadian money managers and companies on a shopping spree that has included Royal Bank of Canada’s $5 billion takeover of Los Angeles-based City National Corp. and Canada Pension Plan’s $12 billion acquisition of GE Antares Capital Corp.

[…]

Canada’s pension funds are also big players. Canada Pension Plan Investment Board has been the biggest buyer of purchases abroad, scooping up about $67 billion of assets in the year through yesterday, according to data compiled by Bloomberg. Ontario Teachers’ Pension Plan Board and Caisse de depot et placement du Quebec have also been active this year.

“It’s a diversification play,” said Mark Chandler, head of fixed-income research at RBC Capital Markets in Toronto. “If anything, the events over the last year have struck home that the Canadian equity-market play is concentrated, and if you wanted to diversify by industry and certainly geography, you have to go abroad.”

Overall, Canadian entities have invested over $83 billion CAD in foreign assets in 2015.

Photo by  Horia Varlan via Flickr CC License