Canadian Investment Fund endorses India reforms

MUMBAI: The $268-billion fund Canadian Investment Fund endorsed India government’s reforms initiatives, saying the economy is on the right track, offering the best returns among emerging markets.

The fund would bet on sectors such as infrastructure, real estate and structured private bond deals as they offer the best returns, said Mark Wiseman, President & Chief Executive Officer at CPP (Canada Pension Plan) Investment Board.

“India is going to be an important and an attractive growth market. Here, we have an office for a reason,” he told ET in an exclusive interaction.
“We have high degree of confidence in this economy...and great confidence in the increasing investment opportunities.”

CPP Investment has opened its new office in Mumbai, the financial capital of the country. The fund, which has invested more than $2 billion in India so far, which is a little less than 1 per cent of its global investment book size, will focus primarily on growing its portfolio here.

Although Wiseman has declined to set an investment target, hypothetically, if they are to double investments to two per cent of its global book size, it may amount to $8 billion in the next 5-6 years.

This means it can result in significant rise in investment in absolute terms -- this is just to show the size of the potential 5-6 years down the line, he said.

However, everything is not hunky-dory as the government needs to pull its socks up while implementing reforms, whether it’s taxation or plugging gaps in the economy.

“The government has to continue to evolve the regulatory environment,” said Wiseman. “It has to continue to evolve the tax environment if it wants to attract large scale foreign direct investment,” he said.

When it comes to prudent investments, the Canadian institutional investor relies on its own risk-return assessment without bothering much about ratings. “All we care for is maximising our risk-adjusted returns. Every single asset we buy is assessed both in terms of risk and return,” he said. “We don’t even require ratings in terms of things we invest in.”

For instance, they sometimes feel an AA-rated paper pays appropriately while a non-investment grade paper too generates appropriate returns. Ecommerce or start-up investment is something CPP is unlikely to taste, at least for now in India even though they see it as a viable investment bet.

“It is not contrarian view in terms of investment. It is just scale,” said Wiseman, adding that they will look at it at a later stage with the industry ecommerce or starts attain more scale requiring more funds.