CDPQ to increase focus on renewables in Asia Pacific

Different markets across the region provide different opportunities for the favoured asset class, pension fund CDPQ’s Asia Pacific infrastructure head tells AsianInvestor.
CDPQ to increase focus on renewables in Asia Pacific

The Caisse de dépôt et placement du Québec (CPDQ) has extensive plans to expand and deepen its exposure to the renewables sector in the Asia Pacific (APAC) region.

For the investment arm managing the penion and insurance plans in the Canadian province of Quebec, renewables across the APAC markets offer not only different opportunities, but also diversification on a global scale. 

Cyril Cabanes, CDPQ

“When we look at the world and the development in the last couple of years, we have seen a de-correlation between Asia and the rest of the world, and it has provided an interesting balance to our exposure in North America, in Europe, in Latin America. We will always be global and need all the parts of the puzzle to make it work, but Asia is becoming an increasingly important part,” Cyril Cabanes, managing director of infrastructure in Asia Pacific at CDPQ, told AsianInvestor.

In October 2022, the pension fund made two deals that spread its renewables footprint in the region, via Japan. One is an investment into and a partnership with Japanese renewables development, financing, and asset management firm Shizen Energy; the other is a green project bond with Singapore-based Vena Energy to finance a solar project in Japan.

“Japan is a rare combination of having a big potential for renewables and being a mature market, which is important to us. We are predominantly a core, core-plus investor by design, and therefore the contribution from developed economies where we can find those core, core-plus deals in a de-risked environment are really important to us,” Cabanes said.


He said Japan, Australia, New Zealand, Taiwan, and Korea are the main markets for CDPQ in APAC, as well as smaller markets like Singapore and Hong Kong to a lesser extent.

Cabanes has been the head of infrastructure in the region since 2016. Five years prior to that, CDPQ had made its first direct infrastructure investment in Australia from its headquarters in Montreal.

As of December 31, 2022, CPDQ had total assets under management (AUM) of C$401.9 billion ($294.8 billion), according to its recently published 2022 annual report.

The investment arm manages the funds of 48 depositors, primarily pension and insurance funds ,in Québec’s public and parapublic sectors, who represent over six million people.

Asia Pacific made up 12% of the total portfolio as of end-2022. The total value of infrastructure assets were C$54.6 billion, while the annual return from infrastructure was 11.5% against a total performance of minus 5.6%.

"Infrastructure generated an annualized return of 9.8%, thanks to the portfolio’s exposure to growth segments, particularly renewable energy," CDPQ also wrote in the annual report.

While there is an emphasis on renewables in Asia Pacific’s developed markets, the emerging economies in the region have also caught CDPQ’s eye.

And although the pension fund is planting the seed for future investments, the focus is to grow gradually in these markets, as they mature and as deal sizes reach a suitable scope. The long-term potential is indisputable, Cabanes pointed out.

For instance, CPDQ has established Apraava Energy in India. In July 2022, CDPQ announced it would increase its strategic participation in Apraava Energy to 50%, making the company a 50:50 joint venture between CDPQ and CLP, one of the largest investor-owned power businesses in Asia.


“If you look at Southeast Asia, we see that the demographics are completely different from Japan, particularly in Indonesia and the Philippines. But then you have to contend with a more challenging local environment in terms of regulation,” Cabanes said.

CDPQ sees various stages of renewables market maturity and appeal even across the developed economies in APAC.

“If I compare even two developed economies like Japan and Korea, just purely on renewables, Japan is substantially ahead of Korea and has much more proactive policies and a much clearer regime, particularly on the offshore wind side,” Cabanes said.

“Korea has been trying to get moving, but it still lacks, at least to me, some of the fundamental pillars that you see getting implemented in Japan, and Taiwan for instance. Korea reminds me of where Taiwan was in 2012 for something like this.”

As all markets have their own appeal, the key thing for CDPQ is to ensure the right risk-adjusted returns in each of those markets. Furthermore, initiating investments in a market also depends on whether the pension fund can identify the right entry points and has the proper platform to execute.

“There is no right or wrong answer, but in terms of developed economies, we find Japan for renewables particularly attractive because of the favourable fundamentals, and that’s quite unique.”


With a dedicated investment strategy for renewables dating back more than two decades, CDPQ has a direct investment approach to the asset class. Instead of investing alongside or through managers’ commingled fund vehicles as limited partners (LPs), the pension fund either does it through owning portfolio companies within the industry, or partnerships when they strategically make better sense.

“It’s really horses for courses depending on what the opportunity looks like and what’s most logical. For instance, it would not make sense to go 100% in Japan, given how idiosyncratic that market is,” Cabanes said.

To get entry points into different stages of the investment cycle, CDPQ supplements purchases of mature, operational renewable assets with pre-approved under-construction assets, as well as investments in developers within the industry. And with that direct ownership and alignment, the pension fund finds that it can de-risk otherwise more risky development-stage projects, especially when the regulatory framework in a market is in place.

“These projects are the more venture or development part of the cycle, so typically higher risk and higher returns, but we do it with leaders in their field that have the scale and track record that can manage the risk,” Cabanes said.

For CDPQ, this build-to-core approach also works in APAC because of the de-risking efforts and also because the potential for renewables is obvious in the region. In general, CDPQ has built a team of 25 professionals across offices in Singapore, Sydney, and Delhi to tap into the region’s growth potential, both in terms of economy and population.

“The high-level numbers are significant, but that doesn’t mean anything if you can’t access opportunities, because then it is just a powerpoint presentation,” Cabanes said.

“We are long-term investors and call ourselves constructive capital, and that means we take a long-term view. It is not going to get done in five-six-seven years, it will take 10-20-25 years to get to some sort of maturity — which is fine,” Cabanes said.

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