Canadian pension fund CPP Investments manages more than C$632 billion (US$463 billion) in assets and is on track to grow its assets by 8% at the end of fiscal 2024, with Asia making up a large part of its portfolio.
“Asia accounts for about 21% of our global investments, about C$133 billion. We are focused on the three largest regions by assets under management: China, Japan and India,” said Agus Tandiono, head of Asia Pacific. Asian Investors The 19th Asia Investment Summit last week.
Tandiono maintains a positive outlook for Asia, noting that the region sees great opportunities in economic growth and technological advancements. He also discussed the Fund’s key investment trends and approach to co-investments, highlighting its commitment to long-term, diversified growth.
Diverse approaches
CPP Investments’ strategy relies on capitalizing on key trends shaping the region.
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Agus Tandiono
CPP Investments
“Since opening our Hong Kong office in 2008, we have made investments based on urbanization, consumption growth and technology growth. We have capitalized on these trends in China, learned a lot and performed very well. We are now applying those lessons to India and Southeast Asia,” Tandiono said.
He highlighted the fund’s multi-pronged approach of engaging in early stage investments through private equity and debt while also actively developing assets in underserved sectors.
“We will invest early in companies in India and select parts of Southeast Asia through private equity and private debt, and if the space lacks the specific assets we want, we will build them from the ground up,” Tandiono said.
“For example, we have been building data centers and logistics warehouses in India to capture future growth.”
Beyond its brick-and-mortar stores, CPP Investments recognizes the transformative power of technology.
“Technology is another key investment trend for us,” he said.
“The Asia-Pacific region has regional winners and world champions at its fingertips. When I joined CPP in 2014-2015, our analysis showed that some of the best world champions are located here, including TSMC, Samsung Electronics and HYNIX.”
“We have been investing in some of these companies since 2015, and with the growth of AI and the need for GPU computing, this trend will continue.”
Seeing Green
The Canadian fund isn’t just focused on economic growth, but sustainability is central to its investment philosophy.
“Global investment in the energy transition is crucial,” Tandiono said.
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The fund invests in renewable projects across infrastructure, sustainable energy, electric vehicle supply chains, batteries and energy storage to actively support the transition to a greener future.
“We’re also helping traditional energy companies transition to green energy. These are all areas we’re actively investing in and evaluating,” he said.
A true partner
CPP Investments leverages co-investments as a key strategy to enhance returns and deepen relationships with partners.
“Many funds and asset owners allocate capital to private equity and stop there,” Tandiono explains, “but we have a dedicated team that handles co-investments, which is also very important.”
This dedicated team enables the fund to participate alongside private equity firms in larger transactions that often exceed the fund’s initial allocation.
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“For example, if a private equity firm is doing a big deal and your fund is only taking 20% or 50%, if you like the deal, you might co-invest in the other 50%,” Tandiono says. “You end up writing a check for another $100 million to $200 million, so your return on that relationship is higher.”
This approach also has some additional advantages.
“The fees are not that high, and there is additional revenue. We tell all our partners that we will evaluate them not only on the return of the fund, but also on how they can contribute to scale the investment and generate excess revenue,” Tandiono explains. “Then we group them together and evaluate them.”
CPP Investments’ commitment to co-investing maximizes returns while fostering strong partnerships that contribute to long-term success.
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