A lot of pension funds are passive, We are a proactive board, says South Asian CDPQ MD

We have five growth markets and India is clearly a priority, says Anita Marangloy George in an interview

Within eight months from the launch of its Indian business, Canadian pension fund manager Caisse de dépôt et placement du Québec (CDPQ) has committed four deals in various sectors in the country. In an interaction with Gireesh Babu, the managing director of CDPQ, South Asia, Anita Marangloy George, explains the thought processes behind investments and mandates, besides speaking of the way forward for the company. Edited excerpts:

You have so far announced four deals in the last two to three months. Could you elaborate on the status of these investments?

We are investing $250 million in a platform in collaboration with Tata Power and ICICI and have managed to rope in investments worth $850 million from Kuwait and Oman in the first phase of the project that has already begun. If we find the pipeline to be robust, we will begin work for the second tranche. Apart from this, we have investments lined up for at least 60 pipeline projects and announcements regarding them will be made soon. Within the next five years, we would like to see most of the capital deployed.

 

In Edelweiss, we have committed $300 million, creating a partnership in the financial sector. We could be committing up to a billion dollar, depending upon the requirement. In Azure Power, we have picked up a minority stake. In TVS Logistics, we are investing $155 million. Here also, we can invest more if the company needs money for some acquisition or growth.

Our approach is that there are no deadlines or constrains on capital. It is more about finding the right partner and doing good business. That is really my mandate.

How much is CDPQ's India fund?

There is no limitation in India. We are not looking for financial engineering, and not trying to be very smart with the money. Our vision is to build companies. Our CEO is interested not in financial recovery per se, but into operationalising and turning around companies. That is the focus and that is our philosophy. I was told, even if you do one good deal a year and find one good partner, that is good enough. If you find 10, then you have to decide what is your priority. I have the backing and freedom to do that. We have five growth markets - India, China, Mexico, Colombia and Brazil - and India is clearly a priority.

You have made investments in energy, financial services and logistics. What other sectors are you eyeing in India?

Healthcare is very big on our radar. We could invest directly into hospital groups, diagnostics, healthcare, consumer services, financial services, technology enabled services, etc. I have a long list, but what we finally select needs to be looked at. We, however, do like the sub-sector of business services a lot.  We look at opportunities that can boost growth, but there are contrains in terms of capital, management and developing a consumer base.

The partner is of foremost importance, followed by the sector. We will look at sectors that promise a long-term opportunity growth. A short time investment in a sector might not be right for us.

What targets have you set for making investments in each company?

We don't have deadlines. We look at business plans and track records; different phases of the project and the time involved in them; other areas for improvement; and ways to become more cost efficient. Because we are investing across the world, we know people who have done something similar to what our partners are doing. We can hire expertise on behalf of the partner, to solve the issues. A lot of pension funds are passive, we are very proactive on the board. We insist on board seats and governance. We have an obligation to provide value.

We definitely have to make money. But we don't have any hard and fast rules. We have five different asset classes - real estate, infrastructure, private equity through funds, direct private equity and listed equities and fixed income. Operating asset in infrastructure will give you an annuity type of return. In private equity the returns expected are higher because the there is growth, besides having a different kind of competition and global dynamics at play. We are differ from private equity, where they have clear hurdle rates.

What kind of growth do you expect in India?

We don't have a specific target. Overall, we are hoping to double our exposure worldwide. We are very selective, we have five countries and even in within those, we are very selective in terms of partners and sectors. I want to be at a place where the pensioner, who is our ultimate client in Canada, feels that their pension is in safe hands. The only way to convey that is to do good business and find good partners so that they can feel proud that they are supporting something worthwhile and valuable and which assures them an income when they retire.