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Canada Pension Board Opens Brazil Office, Eyes Real Estate, Infrastructure

5 February 2014

Canada Pension Plan Investment Board said on Wednesday it will open an office in São Paulo in April, intent on boosting real estate and infrastructure investments in the region even as money is flowing out of emerging markets.

CPPIB, a global dealmaker intent on diversifying its C$192.8 billion ($174 billion) portfolio, said the timing for opening its fifth global office is perfect, though it noted competitors like sovereign wealth funds are also hunting similar assets.

“When other people are exiting the market is perhaps the best time to be entering, particularly when currency values might be a little bit weakened… The good news is there is probably less competition than there was a year ago, with capital flows out as opposed to in,” CPPIB Chief Executive Mark Wiseman said in an interview.

CPPIB already has offices in Toronto, New York, London and Hong Kong, and Wiseman said São Paulo will serve as the hub for its investments in Brazil, Chile, Colombia, Mexico and Peru.

The public pension fund already has nearly C$5 billion in invested assets in the region. While Wiseman said real estate and infrastructure deals would be the main focus of investment growth, public and private equity, as well as private debt, will likely follow as the region’s economy liberalizes and capital becomes more free-flowing.

He said the region has a massive infrastructure deficit and growing need for real estate development, including in both retail and residential housing, and in logistics as its growing middle class demands more services.

“But as the sovereign wealth funds, who are by and large larger than we are, look for assets around the world, we are seeing a greater degree of competition, and that is one of the reasons we have to build long-term capability, including in global markets like Asia and Latin America — to find the best opportunities,” Wiseman said.

Despite its deep pockets, CPPIB has traditionally taken a partnership approach in global deals, teaming up with local entities to buy and manage assets for the long-term.

CPPIB late last year made its first foray into the Indian real estate market, agreeing to invest $200 million for an 80 percent stake in a real estate joint venture with India’s Shapoorji Pallonji Group.

The announcement of the Sao Paulo office comes just days after the Alberta Investment Management Corp said it was opening a London office, its first outside of Canada.

AIMCo, with about C$70 billion in assets under management, has also sought to diversify globally and has said Europe is a strategic market, with C$8 billion already invested in the United Kingdom and Europe.