Canada’s CDPQ is a big fan of partnerships with like-minded investors. The public pension fund is not alone in that, but it has been a particularly keen facilitator of sharing knowledge and networks.
And the coronavirus pandemic has reinforced CDPQ’s faith in its collaborative approach, with more such tie-ups looking likely, as it continues to build its allocation to Asia and in areas such as renewable energy.
“We have always valued collaborations… and we work with our peers, other long term institutional investors. That’s been a hallmark of CDPQ,” Anita George, deputy head of CDPQ Global, the international investment division of the fund.
She cited tie-ups with groups such as Dubai Ports World, a investment platform set up in 2016 that expanded in September to $8.2 billion from $3.7 billion.
“We invest with them across geographies in the port sector, where they bring their expertise and knowledge,” Mumbai-based George told AsianInvestor. "We hope to develop more and more of those types of partnerships."
But the Canadian fund won’t necessarily start to establish longer-term alliances with other asset owners, such as that unveiled in October by Korea’s National Pension Service and Dutch pension fund manager APG to invest in big real asset deals.
“We are working together with asset owners but generally without a formal declaration,” George said. “We work with investors like [Canadian pension fund] CPPIB, [Singapore’s] GIC and Temasek. We bring each other into those transactions where we think there’s an opportunity to work together.”
She does, however, recognise the benefits of partnering with institutional investors in other parts of the world. “Especially if you’re looking at, say, Asia and Europe and you want to bring those two regions closer together. That’s one way of leveraging each other’s footprint, strengths and knowledge of geographies.
“That’s a kind of collaboration that we do seek out even if we don’t state it upfront,” added George.
She cited a partnership that CDPQ struck in 2015 with six Mexican pension funds to invest around C$2.8 billion ($2.2 billion) in infrastructure over five years. In 2017 the consortium acquired 80% of a portfolio of eight wind and solar assets owned by Enel.
“The idea was that [the local pension funds] bring in the local knowledge and understanding of the market, and we bring in the expertise on infrastructure,” George said.
CLEAN ENERGY RAMP-UP
Indeed, the Covid crisis has, if anything, boosted CDPQ’s long-standing focus on clean energy, in which it is one of the world’s biggest investors, with close to 20 gigawatts of capacity.
CPDQ’s latest mega-deal in renewables, unveiled in late December, is a good example of its partnership approach – and of its rising commitment to Asia.
The fund has acquired 50% of Taiwan’s 605 megawatt Greater Changhua 1 offshore wind farm for around NT$75 billion ($2.7 billion) in a joint investment with Taipei-based Cathay Private Equity. Danish renewable energy developer Ørsted will retain 50% ownership.
It was CDPQ’s first direct investment in Taiwan through its infrastructure team.
The deal also fits with the fund’s goals as part of several groupings of influential allocators. It is one of the two founding asset owners of the Investors Leadership Network (ILN), set up in 2018, whose aims include furthering opportunities for women in finance and investment and driving improvement of climate-related disclosures.
CDPQ is also a member of the UN-convened Net Zero Asset Owner Alliance, representing $4.6 trillion of assets under management and focus on limiting climate change.
“What I’m told is that out of the $142 trillion of long-term investor money [globally], around $40 trillion is now earmarked for ESG [environmental, social and governance] investment,” said George. For us, that’s not a new trend, but something which has been part of our DNA.
“That really helps us in Asia, because there three very large emitters in the region – China, India and Indonesia – and therefore there is a lot to be done,” she added.