Canada’s CPPIB Boosts Investments in China

The C$366.6 billion ($282.6 billion) Canada Pension Plan Investment Board (CPPIB) has increased its investment in a partnership that invests in logistics facilities in China by more than 50% to $5 billion.

The fund said it committed an additional $1.4 billion of equity to the Goodman China Logistics Partnership, in which it has an 80% stake. Commercial real estate company Goodman Group owns the remaining 20% of the partnership and contributed an additional $350 million.

GCLP was established in 2009 to invest in logistics properties across mainland China and has a portfolio of 33 properties comprising 2.5 million square meters of space, with current occupancy levels of 99%. It has been granted permission to invest in Chinese equities through China’s Qualified Foreign Institutional Investor program, which allows foreign institutional investors to buy securities listed on stock exchanges in Shanghai and Shenzhen.

In July, CPPIB also announced the launch an investment cooperation with property developer Longfor Group to invest in rental housing programs in China, with an initial targeted investment of approximately $817 million. The fund said the cooperation will invest in tier I and core tier II cities in China through developments, acquisition, and master-lease of commercial assets to be converted into rental housing.

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The investments are part of a long-term plan to more than double the assets the CPPIB allocates to China over the next seven years, according to the Financial Times, which reported that the CPPIB plans to allocate up to 20% of its assets to China by 2025, up from 7.6% today. It also said the fund will allocate up to 30% of assets to emerging markets over the same period, compared to its current 15%.

“With C$28 billion invested in China today, we are committed to further increasing our exposure over the long term,” Suyi Kim, CPPIB’s head of Asia Pacific, said in a release.

Emerging market equities have been the fund’s top-performing asset class over the past two years. For fiscal year 2018 ending March 31, emerging public equities returned 18.6%, after earning 18.9% in 2017, while emerging private equities returned 19.5% in 2018, and 15.4% in 2017.

Tags: Canada Pension Plan Investment Board, China, China Logistics Partnership, Emerging Markets, Pension

An Australian state has sold one of the nation’s largest pension funds a 40-year concession to oversee land parcels for A$2.86 billion ($2.1 billion). The pension program, First State Super, will collect fees for property ownership registrations during that four-decade span.

Meanwhile, the state of Victoria will put the billions in cash toward infrastructure, building up new schools, hospitals, and transportation projects. Victoria will still control the costs of statutory land registry services. After the 40 years, the state will resume full ownership of the land.

In all, the state is expecting to invest around $7.5 billion each year in infrastructure through 2023.

First State Super, one of Australia’s largest superannuation schemes, invests in the retirements of more than 800,000 members. It was initially only for New South Wales government employees, but is now open to anyone eligible for a superannuation. Superannuation is a massive government-run 401(k) plan where employees and employers must contribute toward retirement savings.

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Tim Pallis, Victoria’s treasurer, called the deal “outstanding” and said the move “will deliver a major boost to our already unprecedented investment in schools, hospitals, road, and rail.”

“While others talk, we deliver—with more funding to invest in the infrastructure Victorians need, growing our economy and creating jobs,” Pallis said.

Last year, First State Super was part of a consortium that paid about the same ($1.9 billion) for a similar real estate arrangement in New South Wales.

Tags: Australia, First State Super, Pension, Tim Pallis, Victoria