Mumbai: India is at the heart of the emerging markets investment strategy for Canada’s public pension funds, which is among the biggest in the world. Canada’s biggest public pension manager, Canada Pension Plan Investment Board (CPPIB), with more than C$ 356.1 billion in assets under management is exploring investment opportunities in stressed assets and credit in India, said a senior executive of the firm in an interview.

For CPPIB, which began investing in India in 2009, and set up its first office in 2014, currently has a total portfolio of about C$7 billion in the country.

“Stressed assets is an area that we look at and we are interested in," said Suyi Kim, senior managing director and head of Asia pacific at CPPIB. “We are keenly observing the insolvency and bankruptcy code (IBC) process and we know that a few assets will go through the NCLT process, which is encouraging to see. We have a dedicated credit team in Hong Kong, not in India yet, but they have been travelling to India often to monitor the entire process."

The centre introduced the insolvency and bankruptcy code in 2016 to tackle the massive bad loan mess plaguing the banking sector. As on 31 March, the total bad loans in the banking system stood at 10.25 trillion.

Kim said CPPIB will look to tie up with local partners to tap the stressed asset opportunity. “Partnerships are a very important part of our strategy. For example, in real estate investments or infrastructure investments, after we invest, while we are active investors, we don’t hire hundreds of people to rent out the building. It is important to have a local partner to work with, who has the operating capabilities."

“So, for the distressed assets opportunity, too, we are not going to hire people to work on the operations of the business," she said, adding that the pension fund manager is open to partnering private equity and specialized stressed assets funds as well as strategic investors.

But CPPIB will study each distressed asset case individually and take investment decisions on merit, said Kim. “We are open to different options. Our team is studying it, because there might be different types of opportunities that we might like to address differently. We keep discussing with potential sellers and potential partners. That’s an ongoing work that our team always does."

The Indian distressed asset investment space has seen several foreign investors show interest. Most have tied up with domestic partners to seek out investment opportunities.

In 2016, billionaire Ajay Piramal-led Piramal Enterprises Ltd had said that it was launching a $1 billion distressed asset investment platform in association with private equity fund Bain Capital Credit.

Also, in 2016, Caisse de Dépôt et Placement du Québec (CDPQ), the second-largest pension fund in Canada, had inked a long-term partnership with Edelweiss Financial Services Ltd to invest approximately 5,000 crore (nearly $750 million) in stressed assets and specialized corporate credit in India.

Other foreign investors that have been actively looking at distressed asset investment opportunities in India include Lone Star Funds, which has tied up with IL&FS Group, Canadian asset manager Brookfield Asset Management, Hong Kong-based SSG Capital Management and Pacific Alliance Group. Apart from investing in distressed assets, CPPIB is also keen on the private credit space. “The credit team has been coming to India and studying the landscape. We are keen to bring our credit investments business into India. We have been studying the non-banking financial company (NBFC) space to see whether there is an opportunity for us to invest," said Kim.

My Reads Logout