Asia’s size, continued economic growth, favourable demographics and a maturing private equity industry have attracted global investors to the region for several years. For Canada’s largest pension, which has invested over C$80 billion ($63 billion; €52 billion) in Asia to date, a “partnership approach” is key to its success and staying power in the region.
This approach is how the Canada Pension Plan Investment Board has ramped up its direct investments in Asia in the last 10 years, Suyi Kim, managing director and head of Asia Pacific at Canada Pension Plan Investment Board, tells Private Equity International.
“We set up partnerships first by investing in private equity funds as well as by establishing relationships with other like-minded institutional investors that we can potentially work with.”
Kim adds that the fund takes a lot of time doing due diligence on its partners, working on direct transactions alongside them to get to know them better. “When we look at our private equity managers specifically, our four evaluation criteria include strategy, team, track record and alignment of interests. We generally follow a fund manager for multiple fundraising cycles.”
Betting on the growth of consumption in the region, CPPIB over the last decade has backed managers such as China-focused FountainVest Partners, India’s Multiples Alternate Asset Management and North Asia-focused MBK Partners. The fund makes commitments to both pan-Asia and country-focused private equity funds, with a minimum fund size of $500 million.
CPPIB’s total assets amounted to C$337.1 billion at end-December 2017. Private equity made up 19.4 percent or C$65.4 billion of the fund’s portfolio, which generated a net return of 6.7 percent during the period.
The full interview with Suyi Kim will be published soon on PEI.