CPPIB expects India investments to grow multiple times: Suyi Kim
Suyi Kim talks about new areas of investment that the CPPIB is exploring such as new economy internet firms and sovereign debt, the good and bad of the India opportunity
Mumbai: For Canadian Pension Plan Investment Board (CPPIB), which manages one of the largest pension fund corpus globally, India is emerging as an important investment destination. CPPIB, which began investing in India in 2009, and set up its first office in 2014, currently has a total India portfolio of about C$7 billion. In an interaction with Mint, Suyi Kim, senior managing director and head of Asia Pacific at CPPIB, talks about new areas of investment that the fund is exploring such as new economy internet companies and sovereign debt, the good and bad of the India opportunity and about India’s significance in the world of CPPIB.
Last year you took Hong Kong-based education company Nord Angila private in a multi-billion dollar deal. Are you looking at similar transactions in India? What kind of deals you would like to do in India?
Other strategies that we should bring in India is credit investments that we have been studying for some time. We also have some longer term thematic strategies, which is about looking at structural changes that are happening over a decade or even longer and starting to have an exposure through the public market or private markets. New economy is one of the key focus of the team that is studying those structural changes and how we can have an exposure over time. We have started investing in emerging market sovereign credit and India, of course, is an important part of that, in Asia. So we are going to continue to bring in more strategies and teams on the ground here. We have now more than 10 people on the ground here.
There’s a perception that Canadian funds seek more annuity-based returns. Under that construct, does a high- risk, high-return investments in new economy companies such as Flipkart, Ola and others make any sense?
We have a lot of investments that we have made on the new economy side. Our Hong Kong team, when I used to run the private equity team there, invested in Alibaba back in 2011. That was really the beginning of people doing e-commerce in Asia. We invested in Alibaba when it was a private company, we invested more when it went IPO and we still hold that. That is a sector that we actively look at. We have also invested in JD.com and some of the other internet companies as well. The Indian market, we are watching and studying it. I think there is a huge potential. We have not been able to invest yet, but that doesn’t mean that we have not reviewed. We do view all these opportunities and we want to understand how that evolves, but we don’t rush into the opportunities.
If you were to give the good, bad and the ugly of the Indian opportunity. What would that look like?
The growth that India has seen, it is engine for growth for the global economy, and that’s why we are here. That growth is coming from many sources, including a young population. People have an aspiration to do more and better and having a strong political leadership is also very helpful as well. On the other side, as people have told many times and it is not too different from other countries as well, things are not moving as fast as what people would like to see in many cases. One has to assume that with an 1.3 billion population, it is not easy to have things moving as fast. But some of the reforms that have been made recently have been very encouraging, like the GST (goods and services tax) reforms, which have been discussed for a long time and really seeing that being implemented is very helpful as well. Those have direct impact on our investments as well. For example, we have invested in logistics and modern warehousing platform IndoSpace and those have a positive impact with the GST reform finally coming through, in terms of being able to have the goods moving around the country more efficiently.
You said you would have wanted to see things move faster. How is India placed in the overall scheme of things for CPPIB?
We have recently rolled out a long term plan, the CPP 2025 strategy. A big statement that we are making in it is that we want to invest up to one third in emerging markets. Currently we have about 15% in emerging markets. We have a concentrated emerging market strategy and there are only three key emerging markets—China, India and Latin America. India now is more than Canadian $7 billion, that is about a bit more than 2%. So with our assets size growing and exposure to emerging markets increasing, we expect India investments to grow multiple times.
CPPIB does not have a dedicated India head. What is the rationale for that?
We have regional heads, we have an Asia head, a European head and a Latin America head. We don’t adopt the country head strategy. We invest in close to 50 different countries so that would probably bring a lot of complexity.
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