Canada Pensions Look For Opportunities in Energy Slump

oil barrels

The Canada Pension Plan Investment Board was weighing a bid for Talisman Energy Inc. – the Board decided against it, at the company ended up being bought Tuesday morning by Repsol SA.

But the interest the Board displayed in troubled Talisman Energy is emblematic of a larger trend: Canada’s pension funds are looking for opportunity in the midst of a serious energy slump.

From Bloomberg:

The 22 percent slump in Canadian energy stocks since late November is just the kind of event that can create opportunity for investors such as pension funds, said Ron Mock, head of the Ontario Teachers’ Pension Plan.

“Sometimes that happens when everybody is heading out the door and we actually use our long-term advantage to go in,” Mock, chief executive officer of Ontario Teachers, the country’s third-biggest pension fund, said during an interview at Bloomberg’s office in Toronto last week. The energy market doesn’t appear to have quite bottomed for Teachers yet, he said.

Lower energy prices will reduce companies’ cash flows and eventually put pressure on them to weigh their capital plans for next year, Mock said. That will have some producers looking for investors, or outright takeovers, he said.


Ontario Teachers isn’t consciously counter-cyclical in its investment strategy, Mock said. The focus is on value-oriented, long-term investments, a strategy that tends to provide it with opportunities during both the ups and downs of the market, he said.


Mark Wiseman, CEO of Canada Pension, said on Nov. 13 that the plunge in oil prices might offer investment opportunities in Canada’s energy sector.

“We are seeing a period now where there may be increasing opportunity in the Western Canadian basin and Canadian energy companies as the market sort of reprices,” Wiseman said.


One of Ontario Teachers key concerns about investing in Canada’s oil patch is the potential for regulatory changes, Mock said. This doesn’t dissuade the pension fund from investing in the oil and gas sector, he said, but it does raise concerns that certain assets might become too expensive to develop, he said.

The pension fund also will consider investments based on environmental factors.


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Canada Pension Eyes Corporate India

India The Canada Pension Plan Investment Board (CPPIB) – the entity that manages assets for Canada’s biggest pension plan – has made a flurry of investments in India-based corporations over the past few years. And the flow of pension money to India isn’t likely to slow down – the country is a “key” part of CPPIB’s long-term plan, according to a CPPIB official. More details from Bloomberg:

Toronto-based Canada Pension Plan Investment Board […] is planning to add to the $1.5 billion it has already poured into the South Asian country since 2010, said Mark Machin who oversees its international investments division. “India is a key long-term growth market for CPPIB,” Machin said in an e-mail. “We will continue to seek investment opportunities which may include direct investments,” and will seek “smart” local partners, he said, without elaborating. […] “I can see many pension and sovereign funds coming to India,” said Khushru Jijina, managing director of Mumbai-based Piramal Fund Management Pvt., which has a $500 million realty joint venture with CPPIB. “Basically, the big boys with patient money who want to play the 8-10 year game are coming.” The Canadian pension fund, which made its first India investment in 2010, followed that up with three more in the past year. It invested $200 million in an alliance with construction conglomerate Shapoorji Pallonji Group in November last year followed by $250 million in a venture with billionaire Ajay Piramal-owned Piramal Enterprises Ltd. (PIEL) for debt financing of residential projects in February. The third was $332 million in L&T Infrastructure Development Projects Ltd. in June.

CPPIB manages $206 billion in assets for the Canada Pension Plan.   Photo by travel photography via Flickr CC License