Cyril Cabanes, vice-president and head of infrastructure, Asia-Pacific at CDPQ, talked to us about the Canadian pension fund’s strategy in the region as well as his view of the specific market. Emphasising that reputation is very important to CDPQ, Cabanes explained what that means when looking for local partners and how the market’s growing maturity provides a deeper pool of qualified allies.
Q: What are the main characteristics you look for when choosing local and regional partners?
CC: I think the criteria for local and regional [partners] are no different to what we look for in global partners as well. I think that applies uniformly across different size and geography focus.
I think what´s really important for us is reputation, so we will spend a lot of time ensuring we team up with the best people we can find, in the relevant markets or in the relevant sectors. There has to be a degree of complementarity between us and our partners, that tends to mean that we work better; we’ve worked historically better with strategic players or operators, if you want to call them that way.
There has to be a degree of shared vision and shared values, I think that´s essential for a long-term partnership. Things like governance are particularly important to us and we want to make sure that we work collaboratively in terms of governance.
Q: What are the advantages of investing through partnerships instead of GP-managed funds?
CC: We made a decision a number of years ago to go direct for infrastructure, I think it´s something that we´ve done across the entire organization, I think that CDPQ is 90% direct, 10% indirect, in terms of the way it manages its investments. Why do we do this? Several reasons, one is that it gives us full control in asset selection and partner selection, which is key to us as long-term investors. Also, when you invest for the long-term, it´s difficult to fit that in generally a close-end fund, where there will be some pressure for liquidity at some point, so potential misalignment.
Q: What are the main risks of investing in the APAC region and how do you balance these risks?
CC: Look, I don´t think Asia Pacific is any different to any other region quite frankly. You have the same kind of risks you would have here. in the Americas, for instance, there´s a blend of developed economies and less-developed economies. So, you have to take a quite granular approach, you can´t take a ‘one-size-fits-all’ approach to risk, obviously.
Being granular, in our mind, works in two ways: I think it´s extremely important to have local teams on the ground, and we´ve done it in the region, as we have in other regions, and hire people from the local markets that know those risks.
Q: After three years in the APAC region, what are some of the main trends and opportunities you see emerging here?
CC: I think that the markets are getting more mature, which is a good thing. More mature markets means more transparent and stable regulation, a deeper pool of potential partners and a deeper pool of opportunities. There has been a very strong emergence of local capital in this region, you have seen it in places like the Philippines, Thailand, Malaysia and other places… A combination of strategic players or pension funds, or other types of money, or private money in general. To us, that is very strong positive. It builds that pool of potential partners in those markets, people who have the depth of knowledge so that´s been a really, really strong positive.