Canadian pension fund CPPIB wants to expand investments in Brazil, looking at infrastructure

6/21/18

– The Canada Pension Plan Investment Board (CPPIB) plans to raise Brazil’s share of its investment portfolio in coming years, Canadian pension fund executives said on Wednesday.

CPPIB currently invests 12.3 billion Canadian dollars throughout Latin America, of which about 4 billion in Brazil, where it focuses its activities in the real estate segment through partnerships with Aliansce, Cyrela Commercial Properties (CCP) and Global Logistic Properties (GLP). Overall the fund has about 356 billion Canadian dollars invested and plans to raise that amount to 600 billion by 2025 and 800 billion by 2030.

In December, the Canadian pension fund that is among the 10 largest in the world, joined the renewable energy segment in Brazil through a joint venture with Votorantim Energia, approved by the Administrative Council for Economic Defense (Cade) in March this year.

Still, the total invested in Brazil is below the potential displayed by the CPPIB. “We have invested the same amount in Chile and Brazil is 10 times bigger, so we are working to change this … We see potential, but we are not in a hurry,” commented Rodolfo Spielmann, director for Latin America.

According to him, the infrastructure sector is one of the most striking at the moment, but the Canadian fund is also willing to evaluate opportunities in other segments, including health and higher or basic education.

“We are looking for strong players as partners and strategically interesting,” said CPPIB Global Chief Executive Mark Machin.

 

Executives said the preference is for brownfields or projects that require at least 500 million Canadian dollars. “It has to be something we can climb,” Spielmann added.

In recent years, CPPIB has played a more timid role in Brazil because of the lack of investment opportunities large enough, a scenario that tends to change in the face of the current government’s greater openness to privatization, according to Machin.

“The number of opportunities has increased, but we continue to have difficulties in terms of value (asset prices),” said the global president of the Canadian pension fund.

Asked whether CPPIB intends to participate in the privatization auction of six Eletrobras distributors, scheduled for July 26, Spielmann said it “does not comment on specific assets”, but that transmission, distribution and generation operations are of interest to the fund.

He also did not rule out disputing assets of Petrobras and cited plans to extend the joint venture with Votorantim Energia now that the agreement between the companies was duly concluded after approvals by antitrust authorities.

Executives also minimized the impact of the political-economic uncertainties triggered by the electoral race in Brazil, underscoring the long-term profile of the fund’s investments in the country. “We would like to see the reforms continue, but we are not easy to scare … You have to keep your head cool and invest when opportunities arise,” Machin said.

Source: Reuters

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