Canada’s second biggest public pension fund manager plans to double its exposure to emerging markets with an emphasis on direct private investments, and Asia is a key focus. It has hired an Asia-Pacific head of infrastructure and opened an India office in New Delhi to be run by its first South Asia managing director.
With C$248 billion ($187 billion) under management, Caisse de Dépôt et Placement du Québec (CDPQ) has an EM allocation of around 7% ($13.1 billion), which it aims to raise to 13-15% by 2020, said Rashad Kaldany, CDPQ’s executive vice-president for growth markets.
Some two-thirds of the fund’s assets are in listed equities, but it aims to build its alternatives exposure, in real estate, infrastructure and other sectors.
“We will do this through a combination of direct investments – that’s why we need these offices – as well as through funds,” Kaldany told AsianInvestor. “The emphasis will be on direct platform-type co-investments and building long-term relationships with our asset management partners.”
CDPQ has little exposure through hedge funds, as its focus is on very long-term investments, said Kaldany. “We mainly take long – and I mean seven-, 10-, 15-year – positions in companies and work in partnership with other principal shareholders to build long-term value.”
For example, the fund invested heavily in power generation, ports and airports in developed markets and aims to replicate that strategy in developing markets, he added.
CDPQ also does co-investments in growth markets, and is looking to invest with one or two general partners in Asia over the next 12 months, said Kaldany. “Our plan is to build strategic relationships with a few [private market] fund managers to leverage their network."
With all this in mind, Cyril Cabanes joined this month in Singapore as CDPQ's first head of infrastructure transactions for Asia Pacific. He was previously Singapore-based senior vice president for development at Japanese trading company Marubeni. Cabanes has also worked for Australian firm C3 Infrastructure Capital and RREEF, Deutsche Bank’s alternative investment arm.
Meanwhile, Anita Marangoly George will take up her post as South Asia MD on April 1, tasked with finding investment opportunities across all asset classes in the region. She has long experience of managing global investment portfolios in infrastructure, particularly in energy, mining, water, transportation and logistics.
George was previously senior director of the World Bank’s energy and extractives practice and before that director of infrastructure and natural resources at International Finance Corporation (IFC), the private-sector arm of the World Bank. She has also served as India head at Siemens Financial Services.
She will be rejoining a former colleague, as Kaldany spent around 25 years at IFC before joining CDPQ in September 2013, according to his LinkedIn page.
George will oversee CDPQ’s $150 million investment into renewable energy in India over the next three to four years. It will target hydro, solar, wind and geothermal power assets, likely in partnerships with Indian renewable energy companies.
With branches in New Delhi, Singapore and Beijing, CDPQ does not plan to add any more offices in the region in the foreseeable future. “We are going to concentrate on these three offices and build capacity over the next three to four years,” said Kaldany.
Headed by Edouard Merette, the Singapore office was set up in October 2014 and operates as a regional office supporting activity in Asia Pacific. There are now nine people based there, including Cabanes.
Two other big Canadian public pension funds have also set up shop in Asia in recent years and have been increasing their exposure to the region. Canada Pension Plan Investment Board opened a Hong Kong office in 2012 and Ontario Teachers' Pension Plan did the same the following year.
CDPQ operates as a long-term institutional investor, managing money mainly for public and quasi-public pension and insurance plans, but no private-sector organisations. It invests globally in financial markets, private equity, infrastructure and real estate.
Headquartered in Québec City, the firm also has offices in Montréal, New York, Washington, Mexico City and Paris. The Mexico office opened in January last year as part of its push into emerging markets.