* CPPIB seeking complex deals to beat competition
* Assets rise to record C$170.1 billion in fiscal Q2
* Five-year rate of return 2.5 pct, 10-year return 6.7 pct
* Global equity gains, active management, boost assets
TORONTO, Nov 9 (Reuters) - The Canada Pension Plan Investment Board, one of the world's biggest pension funds and global dealmakers, said it was looking for big, complex acquisitions to boost its portfolio and outmaneuver rivals as the world's economy improves.
CPPIB, whose assets rose to a record C$170.1 billion in the third quarter from C$165.8 billion three months earlier, said its long-term investment horizon and increasingly skilled team of dealmakers will give it an advantage as improving U.S. and Chinese economies bring competitors back to the playing field.
"I think you'll expect to see us favoring larger and more complex deals that are global in nature," Chief Executive Officer Mark Wiseman said in an interview after the fund's second-quarter results were released.
"What we try to do is exploit the areas where we have comparative advantages, and that tends to be in larger transactions, in transactions where the value creation will play out over a long period of time, and in transactions that are occasionally complex in nature," he said.
"We've now built a team with high capabilities that can transact globally and in complex large-scale opportunities."
He said the fund, which invests on behalf of 18 million Canadian contributors and beneficiaries, was still trying to diversify geographically out of Canada. He said it is focusing on emerging markets where the pace of growth was higher than the rest of the world.
Wiseman was optimistic about improving prospects for recovery in the United States, despite the fiscal cliff concern, and in China, where data on Friday showed infrastructure investment accelerated and output from the country's factories ran at its fastest in five months.
"I do think you are seeing signs of longer-term prospects for growth, both in the U.S. -- and that will obviously have an impact on Canada as well -- but also some of the numbers that came out of China this morning are cautiously encouraging," Wiseman said.
Toronto-based CPPIB reported a 1.9 percent return on investments for the fiscal second quarter ended Sept 30, as financial markets gained globally. The C$4.3 billion increase in net assets after operating expenses resulted from C$3.1 billion in investment income and $1.3 billion in net Canada Pension Plan contributions.
The massive size and long investment horizon of CPPIB has enabled it to do deals around the world, especially as cash-strapped governments and companies seek partners with deep pockets.
CPPIB shifted to an active investment strategy six years ago, seeking to boost returns on its portfolio by buying real estate, infrastructure and other assets while providing private equity and credit to partners looking for cash.
Wiseman said prices are recovering in some of the fund's favorite investment areas, including real estate, as investors seek stable returns and the low volatility the asset promises.
"I'm talking about really Class A office buildings and that sort of thing. We're seeing pricing in those assets increasing, with the arrival of a larger number of investors into the asset class. That doesn't mean we can't find value there, but we're feeling very cautious," he said.
In recent months, CPPIB has announced acquisitions across a broad swath of asset classes, including deals in motor sports, Australian shopping malls, British heating and air conditioning and Chinese logistics, adding to its massive portfolio of investments in real estate, infrastructure, private equity and global stocks and bonds.
The fund's five-year annualized investment rate of return edged up to 2.5 percent at the end of the quarter, while the 10-year rate of return rose to 6.7 percent.
CPPIB still has about nine years before benefits paid exceed contributions and it will need investments to help pay pensions.