PSP eyes 2019 opening of Hong Kong office

The C$153bn Canadian pension will open its first office in Asia next year and plans to build a broader portfolio of managers in the region.

Public Sector Pension Investment Board (PSP Investments) has chosen Hong Kong as the site of its debut Asia office, sister publication Private Equity International has learned.

PSP Investments is “working towards opening the office in 2019,” Simon Marc, managing director and head of private equity at the pension told PEI.

“As we establish ourselves in Hong Kong, the objective is to build a strong local team, deepen our existing relationships and look to broaden our portfolio of partners in the region,” he said.

When PEI first reported on the Ottawa-based pension manager’s plans for an office in the region last year, it was looking at either Hong Kong or Singapore for its first Asia outpost and had hired an executive search firm to assist in staffing.

Following the opening of New York and London offices in fiscal year 2017, launching an Asia office and increasing the pension’s global footprint is a priority for PSP for fiscal year 2019, it wrote in its latest annual report.

When asked about emerging markets in PSP’s portfolio, Marc said: “In PE, emerging markets is really about Asia, and how we can capture the phenomenal growth potential in China to a greater extent and go after these macro trends. In terms of contribution to GDP growth, a majority of that is coming from Asia.”

Marc noted that although Asia was previously known for industrials and lower-cost manufacturing, “the region has now emerged as a hub for technology and disruption, ranging from e-commerce, to fintech and electric vehicles”.

Australasia made up 5.8 percent of PSP’s portfolio across all asset classes, while infrastructure accounted for 9.8 percent or C$15.0 billion ($11.4 billion; €10.0 billion) of the C$153 billion of assets it held under management, as of 31 March.

One of its largest investments in the infrastructure sector last year was in Asia, when it partnered with New York-based Global Infrastructure Partners to acquire Equis’ 11GW renewables portfolio, renamed Vena Energy, for $5 billion.

Fiscal year 2018 was also a “record year” for its infrastructure portfolio, the Canadian pension stated in its 2018 annual report, generating a one-year-return of 19.3 percent.

PSP invests on behalf of pension plans of Canadian public services, the Canadian Armed Forces, the Royal Canadian Mounted Police and the Reserve Force.

Canadian pensions that have a presence in Hong Kong also include Canada Pension Plan Investment Board, which opened its office in 2008, and Ontario Teachers’ Pension Plan, which set up in the city in 2013.