* 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
By Andrea Hopkins
TORONTO, Nov 9 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,"
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
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
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