Mumbai Canada’s largest pension fund manager, CPP Investments, largely sees long-term opportunities as countries and companies begin the clean energy transition, and it plans to double investments in the space by 2030, senior executives said in an interview. She is making.
“A year ago, we started to develop the narrative internally by thinking of climate not only as a risk, but as an opportunity, commensurate with the type of capital we have. World net-zero And it is not just the transition from conventional energy to renewable energy. It is for the entire economy to transition, which will require a significant amount of capital of $3 trillion per year. Therefore, we see this as a generational investment opportunity to invest in the global economy transitioning to net-zero,” said John Graham, President and Chief Executive of CPP Investments.
The government’s mandate to reduce fossil fuel use has already prompted large capital inflows into renewable energy, and scientists warn that in order to keep global warming to within 1.5 degrees Celsius above pre-industrial levels, investments Carbon emissions should be halved by 2030 from 2019 levels. Only likely to intensify.
“In India, we have a partnership with Renew Power. We also look to invest with leading renewables platforms around the world.”
Graham said that every asset class, whether it is real estate, private equity, credit or public equity, will present opportunities to invest in the economic transition. Of Canada’s $550 billion ($436 billion) in assets under management, CPP Investments currently has C$67 billion in energy transition assets, including its investments in the renewables sector. The pension fund manager plans to double this by 2030.
Having grown his portfolio in the country despite the pandemic, the fund manager remains optimistic about India. It plans to increase investment in sectors such as infrastructure, real estate and technology, while also expanding its presence in credit and pharma and healthcare, where it does not have significant exposure in India.
“As you can see, with C$19.6 billion being invested in India, it (investment) has been strong. It’s been a strong few years, even through COVID, where we have continued to grow our portfolio physically. And for me, one of the most encouraging parts of this is the breadth of our portfolio in India. It is really exciting to see growth in infrastructure, real estate, public equity and private equity. It really speaks of diversification in the Indian economy and the depth and breadth of the economy. And that’s one of the reasons we’re so excited about the future opportunities here,” Graham said.
The pension fund manager has invested in several Indian tech companies, including Flipkart, Byju’s, Versace Innovations and Eruditus, and will continue to allocate capital for such investments, even though technical valuations have recently come under pressure due to volatile global markets.
“Globally, there has been a slight improvement in technology valuations as rates have gone up. But for us, we see it as an important component of the global economy. It is important for us to have diversification and growth in our portfolio. What we focus on as an investor is really choosing our location. We don’t invest in everyone, and we take our time and find companies where we think they are high quality companies, and invest in them for the long term,” Graham said.
Sujit Govindaraju, managing director and head of India office, CPP Investments, said the pension fund manager has a nuanced approach to investing in technology companies. “There’s no one-size-fits-all answer. We go sub-region by sub-region, and then we evaluate what works. We’ve seen certain trends come into play. For example, China or In South Korea, once you hit $2,000 per capita income, household consumption just kicks in. That’s what’s happening in India in the last two-three years. But then you look sector by sector and What’s happening there. What’s the company’s ability to start monetizing? They will benefit, but they need to be very careful about how they’re using the cost curve as revenue grows. So “We look at it very minutely. We will not invest based on trends.”
Govindaraju said that CPP Investments has not invested in the pharma sector, but the sector sees promising opportunities post-Covid.
“India can be a big pharma powerhouse. What has happened after covid is that some companies have built some great capabilities. So we are looking for great pharma companies who can not only cater to the Indian audience but also become an export powerhouse and build long term capabilities.”