Canada Pension Fund Giants Seeking Private Deals

Some of Canada’s largest pension funds are seeking investments in everything from technology to GE Capital assets as they adapt to unpredictable equity markets.

“The elastic is pulled tight,” Michael Sabia, chief executive of the Caisse de Depot et Placement du Quebec, said on a panel at the Bloomberg Economic Series Canada conference in Toronto. “We do believe that the public markets are now just much more vulnerable to headwinds. I think the best days are behind us.”

Sabia was joined by Ron Mock, CEO of Ontario Teachers’ Pension Plan; Winston Wenyan Ma, head of China Investment Corp.’s North America Office; and Andre Bourbonnais, the head of Public Sector Pension Investment Board. Collectively they have more than a trillion dollars of assets under management.

Sabia said demand for alternative assets is rising as it becomes more difficult investing in public markets, citing potential issues in China, household debt, and even a modest increase in interest rates as events that could swing equity markets unexpectedly.

The fund managers pointed to real estate, infrastructure, and technology as attractive industries.

“We’re looking hard at some platinum quality infrastructure, real estate, even though those asset classes are pricier,” Sabia said. Sabia also said in a Bloomberg TV interview he would be interested in buying assets from GE Capital, General Electric Co.’s finance unit, without specifying which ones.

“Things are very, very expensive so it’s not an easy time to be looking for investments,” Mock said. “Infrastructure, real estate, some private capital type investments are things that we’re looking at.”

Mock also said there are 235 pools of money seeking infrastructure deals, compared with only 10 in 2001, increasing competition for assets and prices.

‘Scary World’

Bourbonnais, who said he’s seeking to double PSP’s assets in six to 10 years, said there’s “nothing exciting” right now.

“It’s actually a scary world out there,” he said. “It’s very, very difficult to find value in any asset class because everything is priced to perfection.”

The conference was the first public appearance for Bourbonnais since he took over as CEO of PSP on March 30.

Collectively, the Caisse, PSP, Ontario Teachers’ and CIC have about C$1.2 trillion ($980 billion) in assets under management around the globe.