CPPIB plots India strategy

The Canadian pension plan, bullish on India in the longterm, is mulling plans to open a Mumbai office.

The Canada Pension Plan Investment Board is rolling out plans to open an office in Mumbai, India, sometime in the next 18 months, a source with direct knowledge of the matter confirmed to Private Equity International.

“[CPPIB] is certainly doing work and potentially opening an office there. They are very interested in opening an office [in India because] the economy has very long-term potential,” he explained. “It is [part of] a strategy to have a handful of international offices that are close to important, long-term strategic markets.”

However, the $201 billion pension fund is still in the early stages of assessing the opportunity, the source said, adding that it is part of a longer-term strategy.

“[India] has been a very challenging investing environment for years. [This] is not indicative of a change in the near-term, it will probably still be quite challenging environment. But it is also one that requires being close to the business community and therefore one where it is difficult to fly in and fly out. It requires people to be on the ground.”

A spokeswoman for CPPIB declined to comment on the matter, however, she was reported in the Times of India as saying, “India is a key long-term growth market, as it is aligned with our strategy of seeking investments in emerging markets that we believe will deliver attractive risk adjusted returns. I cannot provide comment on any recruitment efforts that may be occurring at this time.”

CPPIB has typically been one of the first movers among North American LPs in Asia.

The firm opened its office in Hong Kong as its first international location in 2007 and has since invested $11.4 billion in Asia excluding Japan and Australia. CPPIB has invested $5.3 billion and $5.8 billion in Japan and Australia respectively.

In comparison, fellow Canadian LP, the Ontario Teachers’ Pension Plan, just opened its Hong Kong office in September 2013. None of the US pension funds have a presence in the region.

CPPIB has offices in Toronto, London, New York and Hong Kong, and last month said it plans to open an office in Sao Paulo, Brazil, with three investment professionals, PEI reported earlier.

In India, the LP will likely focus on infrastructure and real estate investments, but also continue to look at private equity funds and co-investment opportunities. The firm has one private equity fund investment so far in the country, as well as co-investments.

“The perspective is that no matter what happens in the next one or two years, in the next twenty years there will be growth [in India], there will be interesting opportunities, but in order to build the right expertise and build the right partnerships CPPIB will probably need a handful of people on the ground.”

However, the source added, “There are lots and lots and lots of issues of opening an office on the ground [in India] that they’re just starting to look at. That’s why it is not going to be this year.”