Tag: Canadian Pension Plan Investment Board

Canada Pension Board to Open India Office

India gate

Pension360 covered last week the reported interest in Indian investments expressed by the Canadian Pension Plan Investment Board (CPPIB). Today, that interest became much clearer, as the CPPIB announced plans to open an India office in Mumbai.

More details from the Economic Times:

Canada Pension Plan Investment Board (CPPIB), the giant pension fund that makes private-equity investments, plans to open an India office and has hired Kotak Realty Fund executive V Hari Krishna as a key member of its local team.

Krishna would join CPPIB in the coming month from the Kotak fund where he was a director for more than nine years, said two people having direct knowledge of the matter. He has also worked at real estate consultancy firms in the pat.

The proposed India office will be the second for CPPIB in an emerging market, indicating the fund’s growing focus on India where the economy is expected to turn around after two years of sub-5 per cent growth. “The India office will be set up in Mumbai in the next two-three quarters and CPPIB intends to do direct transaction over the next 12-18 months,” said one of the two people. “The fund has been looking to hire heads for real-estate, infrastructure and equities for India to drive investment.”

The pension fund refused to comment on office opening or recruitment in India, including of Krishna. “As a growing global investment organisation, we do look at expansion to more locations,” said Mark Machin, senior managing director and president of Asia at CPPIB. Krishna didn’t reply to a text message seeking comment.

The CPPIB appears to be primarily interested in Indian infrastructure and real estate investments. From the Economic Times:

In June this year, it offered to invest around $322 million in India’s infrastructure sector through L&T Infrastructure Development Projects, a unit of Larsen & Toubro.

It offered another $250 million in a strategic alliance with Piramal Enterprises to provide structured debt financing to residential projects across major urban centers this February, and a $200 million strategic alliance with the Shapoorji Pallonji group to acquire stabilised office buildings that are foreign-direct-investment compliant in late 2013.

“India is a key long-term growth market for CPPIB. The fund has committed approximately US $1.4 billion in India since 2010 and will continue to look to India for investments that fit with our long-term investment mandate,” CPPIB’s Machin said in an email response.

The CPPIB would not confirm or deny the plans for an India office.

Newspaper: Report on Canadian Investment Expenses “Misses the Point”

Canada map

Last week, Pension360 covered a report questioning the Canada Pension Plan’s new investment strategy, which had led to a more than 100 percent increase in investment expenses since 2006.

But one newspaper, the Hamilton Spectator, says the report missed the point entirely. From the Hamilton Spectator editorial:

Rousing displays of verbal fireworks could not conceal the study’s failure to find out what Canadians need to know. […] The country needs to know whether private-sector plans or the public plan is a more efficient way of saving for retirement.

The authors found the government collects the contributions to the Canada Pension Plan and pays out the pensions, for an administrative cost of around $550 million a year. The government recovers that cost by skimming an administrative charge off the contributions. If the CPP Investment Board counted that cost as part of its operating costs, those costs would be $550 million higher.

But we need to know if the government’s costs for collecting contributions and mailing out cheques are out of line with operators of private-sector pension plans. The study’s authors make no inquiry on that point.

A more useful study would produce evidence both from the public and private spheres. That study would have to be written by authors who gather the evidence first and then draw their conclusions. The study published last week seems more like the work of an agency with a narrow agenda — what you might call a self-serving bureaucracy.

The report, released last week, found the Plan’s investment expenses had increased from $600 million or 0.54% of assets in 2006 to $2 billion or 1.15 per cent of its assets in 2013.