Canada pension plans C$1bn RE investment in Asia

The Canada Pension Plan Investment Board reveals expansion plans for Asian real estate just as it announces a joint investment of $400m in a new China fund with Ontario pension fund.

Canada’s second-largest retirement scheme manager, the Canada Pension Plan Investment Board, is planning to add C$1 billion ($1 billion) to its real estate investments in Asia over the next year to 18 months, it has been confirmed.

The Toronto-based company, which today announced the opening of its first international office in Hong Kong, said it was looking to significantly boost its real estate investments in Asia saying the market represented “an increasing portion of the global capital markets.”

A company spokesman confirmed to PERE that the pension fund was looking to increase its allocation to real estate – which according to its website stood at 5.4 percent at the end of 2007 – with plans to begin direct investment in Asia infrastructure, such as electricity transmission networks, toll roads and ports.

The news came as Canada Pension and Teachers' Private Capital (TPC), the private investment arm of the Ontario Teachers' Pension Plan, both announced investments of $200 million each to FountainVest, a new private equity fund focused on China set up by former executives of Singapore state investor Temasek Holdings.

“As a long-term global investor, we've recognized we need to have a greater amount of our investment capital in this region over time,” Mark Wiseman, senior vice president in charge of private investments at Canada Pension told Bloomberg. The Canada Pension’s spokesman later confirmed the details to PERE.

This is the fifth investment in an Asia-focused private equity fund for Canada Pension, the spokesman said, bringing the group’s, and TPC’s, total commitment to private equity and real estate in the Asia region to C$1 billion respectively. Canada Pensions’ website revealed the retirement fund managed C$119.4 billion at the end of 2007 for 17 million Canadians.

The Canada Pension’s office in Hong Kong will be followed by an office in London sometime in late spring, the spokesman added.