The combination of size and reinvestment creates a powerful compounding effect, according to Agus Tandiono, senior managing director and head of Asia Pacific and active equities Asia at Canada Pension Plan Investment Board (CPP Investments).
“One of the key drivers of our success is our scale. As a large global investor, we have the ability to access opportunities that are otherwise out of reach to smaller companies,” Tandiono said. Asian Investors The day after the 19th Asia Investment Summit’s annual report.
CPP Investments reported total net assets of $463 billion as of fiscal year end 2024, an annualized net return of 8.0%, and a 10-year net return of 9.2%, bringing cumulative net income since its inception in 1999 to $432.4 billion.
Agus Tandiono
CPP Investments
However, he said it is not just the size of the fund that gives CPPIB an edge, but also the way it utilises the proceeds.
“We are expanding because there are no redemptions of profits. Everything we generate, in this case 8 percent profits, is reinvested,” Tandiono said.
A second strength is the firm’s long-term horizon, which allows the fund to put capital into investments that might not be suitable for shorter-term investments, Tandiono said.
“Canada’s Chief Actuary has found that we are financially sustainable for the next 75 years. With that long-term capital, we can invest in long-term investments that require a patient and committed approach, such as infrastructure projects, real estate and private equity,” he said.
Asia Allocation
Active management and diversification are at the core of CPP Investment’s investment strategy.
“We invest in 56 countries, diversify across asset classes and geographies, and that’s how we’ve built a C$632 billion portfolio,” Tandiono said.
“Asia accounts for approximately 21% of our global investments, accounting for approximately C$133 billion. We invest in the three largest regions by assets under management – mainland China, Japan and India. We cover all investment sectors, from private equity to real assets to public equities,” he said.
CPP Investments is focused on identifying key markets and trends with the greatest growth potential to effectively allocate capital in the Asia Pacific region.
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“Asia is really diverse. You have developed markets like Japan and Australia, and emerging markets like Indonesia, India and China. Two of the world’s top three economies are in Asia, China and Japan, and the two largest emerging markets, China and India, are also in Asia,” he said.
With eyes wide open
Asia’s diversity offers more options, but it also requires decisions about where to allocate the fund’s capital to make the biggest impact, Tandiono said.
“We value local knowledge for risk assessment and risk mitigation, which is why we have offices in Mumbai for investments into India, Hong Kong for investments into mainland China and across Asia, and Sydney,” he said.
“Local knowledge is crucial because you need to do your due diligence, understand the local companies, know the good, the bad and the dangers. Then invest with your eyes wide open.”
Overall, CPP Investments has over 328 global partners, ranging from private equity GPs across the world to local private equity partners in India and Korea.
“In Asia Pacific private credit, we have partners across the region and within each market. In real estate, we also have local partners when building logistics companies and data centres, and in infrastructure in places like Indonesia,” he said.
CPP Investments also invests through a number of hedge funds to gain a deeper understanding of trends and investment theories.
“On innovative risk management, we look at it as an integrated risk framework. We’re not just looking at risk and volatility in security selection, sectors, asset classes and regions. We also look at reputational risk when investing in companies and sustainability,” he said.
Unified organization
CPP Investments’ innovative ‘One Fund’ philosophy is at the heart of its strategy, particularly in its approach to managing a diversified and robust investment portfolio across Asia.
“Instead of private equity competing with other private equity or private debt competing with other private debt, we come to the negotiating table as one CPP Investments, or what we call ‘one fund,’” Tandiono said.
This unified approach will enable CPPIB to effectively leverage its broad range of expertise across various financial disciplines.
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“For example, if a private equity investment reveals that a company needs private credit, we can leverage our existing knowledge and relationships to quickly introduce them to our private credit team,” he said.
“We’ve had some success stories where getting these big allocations was about getting in early, understanding them well and funding them,” Tandiono noted.
Additionally, this strategy also applies to long-term endeavors.
“We also tell them that if they go public and go public, our public offering team can evaluate them and invest in them,” he said.
“Operating as a C$632 billion integrated fund not only maximizes our internal resources, it also significantly enhances our competitive position and creates a cohesive and powerful investment capability.”
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