Canada Pension Plan Investment Board, the country’s second-biggest retirement fund, tapped a veteran investment banker to head its Asia-Pacific unit as it seeks to increase investments in the region.
Mark Machin, who stepped down as Goldman Sachs Group Inc.’s vice-chairman for Asia-Pacific excluding Japan in December, will become president of CPPIB Asia Inc. effective March 19, the company said in an e-mailed statement today.
Machin, 45, joins Toronto-based Canada Pension as the retirement plan is expanding its reach into emerging markets with a focus on Asia and Latin America. The fund had less than 9 percent of its C$152.8 billion ($153.3 billion) in total assets invested in Asia at the end of December, according to the statement.
“Our expectation is that our investments in Asia-Pacific will grow disproportionate to the upside of the total fund,” said Mark Wiseman, executive vice president at Canada Pension, in an interview in Hong Kong today. “We have to be here. I think we’re actually behind where we need to be.”
Canada Pension’s current level of investment in Asia is “arguably underweight,” relative to size of the region’s economies, Wiseman said.
Machin, who spent 20 years at Goldman Sachs and ran the New York-based bank’s investment bank for six years, will be based in Hong Kong in his new role, according to the statement.
Fundraising by private equity firms in Asia rose to a record $53.8 billion last year, from $43.5 billion a year ago according to the Asia Venture Capital Association. Canada Pension has already committed capital to Asia-focused funds run by Baring Private Equity Asia, Citic Capital, Hony Capital Ltd., and MBK Partners Ltd., according to its website.
The fund will invest in local funds and also co-invest with those funds, Wiseman said. Apart from private equity, Canada Pension is broadening is investment in real estate and infrastructure and its primary markets are China, Australia, India and Japan, he said.
“It certainly makes sense for them to be thinking on those terms,” William Robson, chief executive officer of C.D. Howe Institute, a Toronto-based nonpartisan research firm, said in an interview. “They do need, increasingly, to move abroad if they want to escape the cap on growth that Canadian demography imposes on them and do a little better for the investors in the fund.”
Machin’s appointment comes after several senior investment bankers have left Goldman Sachs for the private equity industry in Asia. TPG Capital hired former Goldman Sachs managing director Steve Sun as a partner in China last year, and Permira Advisers LLP hired Alan Chen, executive director of the bank’s Asian Special Situations Group, as head of China, it said in August.
Richard Ong, who was Goldman Sachs’s co-head of Asia investment banking with Machin, left in 2008 to join Hopu Investment Management Co., a fund set up by Fang Fenglei, who ran Goldman Sachs’s Chinese securities venture. Ong later started his own fund called RRJ Capital.
Machin trained as a doctor before joining Goldman Sachs, where he worked for 20 years until his departure. Canada Pension, which opened its Asia office in Hong Kong in 2008, has 20 staff based in the city, according to the statement. The fund may open its second Asian office in India, Wiseman said.
Canada Pension also said today it also retained Vikram Gandhi, a former Credit Suisse Group banker, to advise the fund on investment opportunities in India.
Canada Pension covers every Canadian province except Quebec. Caisse de Depot et Placement du Quebec, the country’s largest pension manager, oversees pensions for retirees in the French-speaking province.