Jan 31, 2023
Canada's US$181B pension fund pauses private China deals
OTPP’s allocation to public markets ‘quite low’ relative to peers: CEO
Ontario Teachers’ Pension Plan, a Canadian fund that manages $242.5 billion (US$181 billion) of assets, has paused direct investing in private assets in China, according to people familiar with the matter.
Geopolitical risk is among the reasons behind the pension fund’s move, said one person, who asked not to be identified discussing a sensitive matter.
“Our current focus is on listed securities, building value in our existing portfolio, and investing in public and private assets via fund partners,” rather than direct private investments, according to a statement from Dan Madge, a spokesperson for Ontario Teachers’.
Canada has already started restricting Chinese investment in its critical minerals sector, ordering three Chinese firms to divest from a trio of junior lithium explorers in early November. The country has also proposed to change its foreign investment law, creating new powers for a cabinet minister to impose conditions on deals to protect national security.
Teachers’ has about $5 billion invested in China, equal to about 2 per cent of its portfolio, Madge said. Direct investments include online education startup Zuoyebang, community group buying company Xingsheng Youxuan, and micro lender CD Finance, according to its website.
China assets are rallying as a relaxation of pandemic restrictions and renewed support for the embattled property sector boost sentiment after two years of declines. China’s main stock index has soared almost 20 per cent from October lows, putting it on the verge of a bull market.
Even with the private asset pause in China, the Toronto-based fund is growing in Asia. Teachers’ plans to deploy about half of new investments outside North America, and recently opened an office in Mumbai while expanding in Singapore.
“We have strong momentum in Asia and will continue seizing diversified investment opportunities in the region,” Madge said.
Ontario Teachers’ manages funds for 333,000 retired and working teachers in Canada’s most-populous province. It has set a target to have $300 billion in net assets by 2030, according to its website.