Canada Pension Eyes $1 Billion of Australian Timber


Canada’s Public Sector Pension Investment Board (PSP) is in talks to buy $1 billion worth of Australian timber assets from Hancock Timber Resource Group.

More details from the Australian:

CANADA’S Public Sector Pension Investment Board could be about to swoop on one of Australia’s most valuable timber plantations, with sources saying about $1 billion worth of forests owned by Hancock Timber Resource Group are on its radar.

PSP executives have been in Sydney this week sounding out counterparties ahead of what some say is shaping up to be an aggressive acquisition spree by the Canadians focusing on Australian property, agriculture and billions of dollars’ worth of upcoming infrastructure assets for sale by federal and state governments.

It is understood a major Australian acquisition is on the cards by PSP and the seller it is engaged with is Hancocks.

Recent forestry portfolios placed up for sale have struggled to secure strong prices, but the industry is now shaking off pain from weaker industry demand and collapsed managed investment schemes, which could see some plantations sell for some more bullish prices, with an increasing appetite for timber from woodchip markets.


Across the Tasman, PSP is finalising the purchase of forest plantations from Harvard Management in conjunction with New Zealand Superannuation and local Iwi tribes worth $NZ2.35bn ($2.15bn), and recently outlaid more than $NZ1bn for the acquisition of AMP’s office portfolio.

PSP manages $97 billion in assets.


Photo by Rick Payette via Flickr CC License

Report: Canada Pension Board Maintains Two Dozen Shell Companies To Avoid Taxes

Canada blank mapCanada’s Public Sector Pension Investment Board (PSP), the entity that manages pension assets for the Public Service Pension Plan, the Canadian Forces Pension system and others, maintains a complex arrangement of offshore companies for the purpose of avoiding taxes on investments in Europe.

CBC reported the story Wednesday:

The federal agency that invests civil servants’ pensions set up a complex scheme of European shell companies and exploited loopholes that helped it avoid paying foreign taxes — a move that could undermine Canada’s standing internationally as its allies try to mount a crackdown on corporate tax avoidance.

The arrangement involved two dozen entities, half of them based in the financial secrecy haven of Luxembourg, and all of them set up in order to invest money in real estate in Berlin by a Crown corporation called the Public Sector Pension Investment Board.

The blueprint for the tax-avoidance plan was obtained by the Washington-based International Consortium of Investigative Journalists and shared with CBC News as part of a larger leak of records exposing hundreds of corporate offshore schemes set up to capitalize on advantageous tax and secrecy rules in Luxembourg.


While the Canadian government corporation’s transactions were not illegal, a senior German tax official who reviewed them said the pension investment board had used “a very aggressive way to avoid taxes.”

“The only goal is to avoid taxes,” Juergen Kentenich, director of the regional tax office in Trier, Germany, said of the tangle of Luxembourg companies.

The scheme is legal, but was used to avoid paying taxes on German real estate owned by PSP. CBC reports that the fund successfully managed to avoid paying $20 million in German taxes:

The documents — which consist of a tax plan devised for the pension board by global accounting firm PricewaterhouseCoopers — show that the pension fund acquired 69 mixed residential and commercial buildings, totalling nearly 4,500 suites and units, in Berlin in 2008.

CBC News has learned the buildings were acquired for close to $390 million. But as a result of the way the transaction was structured, the pension investment board would have avoided paying $20 million in German taxes.

The purchase exploited a loophole in Germany’s land transfer tax, which is normally levied on any entity that acquires 95 per cent or more of the shares of a real-estate holding company.

Instead, the pension board bought a direct 94.4 per cent interest in a number of Luxembourg-based property holding companies, and then obtained an indirect interest by taking a large majority position in entities that held the remaining 5.6 per cent.

The board thus obtained a 96.4 per cent overall stake in the Berlin buildings, but the German loophole meant the indirect holdings weren’t counted toward the real-estate transfer tax — so it didn’t pay any.

The Public Sector Pension Investment Board manages $93.7 billion in assets.