Canada’s national pension fund is looking at deals in the travel industry, confident that it will enjoy a strong recovery when the COVID-19 pandemic eases, says its chief executive.
“Hotels aren’t over, cruises aren’t over, flying’s not over -- these things are going to come back,” Mark Machin, CEO of Canada Pension Plan Investment Board, said Friday in an interview with Bloomberg. “So I’m supportive of teams if they find decent opportunities in those areas.”
The country’s largest pension fund, which has $434 billion of assets under management, hasn’t made any investments in the sector since the pandemic hit but is “keenly looking at some things,” Machin said. More than 20 per cent of the fund is in private equity.
Its private holdings include ownership stakes in Spain’s Hotelbeds Group SL and Britain’s Merlin Entertainments Ltd., which runs Legoland theme parks and other attractions in 25 countries. It’s also an investor in Las Vegas-based Diamond Resorts International Inc., which it acquired as part of Apollo Global Management Inc.’s takeover of Diamond in 2016.
“Valuations are quite cheap. We’ve never bought an airline so I’m not suggesting we’d invest in airlines at this point,” Machin said. But other firms are -- Bain Capital LP rescued Virgin Australia Holdings Ltd. in a deal with creditors to restructure the business, which fell into administration in April.
That doesn’t mean there aren’t other opportunities. Machin said it’s unlikely that travel and hospitality-related companies will see their business recover to pre-pandemic levels soon, even if pharmaceutical companies are successful in producing a COVID-19 vaccine next year. It will take a while for public confidence to grow, he said -- but it will recover.
“I personally am a believer in us all being social beings,” Machin said. “I don’t think we’re all going to be sitting isolated for the rest of our lives.”