UPDATE 2-Canada Pension Plan sees acquisition opportunities

* Global infrastructure, U.S. real estate appealing

* CPP fund up C$7.2 billion by Sept 30

* No plans to change asset mix (Adds impact of stronger C$ paragraphs 17-18; in U.S. dollars unless noted)

By Pav Jordan

TORONTO, Nov 12 (Reuters) - The Canada Pension Plan Investment Board, which bought a U.S, healthcare company in the largest leveraged buyout of the year, sees opportunities ahead, notably in infrastructure and U.S. real estate.

CPPIB and U.S. private equity firm TPG [TPG.UL] agreed last week to buy prescription drug sales data provider IMS Health Inc (RX.N) for $4 billion.

The pension fund, together with the Ontario Teachers' Pension Plan Board, also took an unsuccessful run at Australian toll road operator Transurban Group (TCL.AX), which spurned their $4.4 billion bid.

"We do see continued opportunities for us to make investments, particularly in the private market, private equity, infrastructure and real estate," CPPIB President and Chief Executive David Denison told Reuters in an interview after the fund's quarterly results were released.

"We have seen infrastructure assets that come available in large part because some of those assets were overleveraged in their existing structures and need fundamentally to be restructured. We think there are more of those that we'll have an opportunity to look at," he said.

"We think there is opportunity in real estate yet to come to the market, particularly in the United States, so we'll be focused on that."

CASH FOR MERGERS, ACQUISITIONS

Flush with cash, CPPIB and other major Canadian pension funds are seen as key players in merger and acquisitions as the world slowly recovers from one of the worst economic crises since the Great Depression.

The recession radically redrew the map for capital markets, making debt financing scarce and empowering those who brought cash to the table. Sovereign wealth funds are also major players in what the market is calling the "new normal."

"The level of equity that is required for these transactions is much higher than it used to be," said Denison. "More equity means less risk in a transaction, and that makes sense for us."

The CPP fund ended the second quarter of fiscal 2010 on Sept. 30 with C$123.8 billion ($117.9 billion) in assets under management, compared with C$116.6 billion on June 30.

Denison said the rise was largely due to soaring equity markets, which favored the fund's asset allocation mix.

As of Sept. 30, the CPP asset mix included 55.8 percent equities, or C$69.2 billion, consisting of 44.6 percent public equities and 11.2 percent private.

Fixed income, including bonds and money market securities, and other debt and debt instruments, made up 30.7 percent or C$38.1 billion.

Inflation-sensitive assets represented 13.5 percent or C$16.6 billion -- 5.6 percent in real estate valued at C$6.9 billion, 4.8 percent in infrastructure assets valued at C$5.9 billion, and 3.1 percent in inflation-linked bonds valued at C$3.8 billion.

"We maintained the strategic asset mix in the downturn, we maintained it over these past six months and we've seen that by maintaining the asset mix in inevitably cyclical markets, over periods of time, the fund gets rewarded," Denison said.

"So we will absolutely, maintain those strategic weightings for the next six and 12 months."

Denison said investment returns for overseas holdings have been dampened by the strength of the Canadian dollar CAD= over the past six months, which closed near a three-week high on Thursday.

He added that the CPP fund's substantial holdings in private equity could still add to the value of the fund as they come in line with the public market uptick.

($1=$1.055 Canadian) (Editing by Rob Wilson)