Canada Pension Fund Looks to Invest US$2.6bn A Year In Sustainable Projects

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Canada Pension Plan Investment Board, or CPPIB, has exceeded expectations for its new power and renewables group by investing more than C$3.5 billion (US$2.6 billion) in its first year, and is now eyeing annual commitments of around the same scale.

The Toronto-based investor, with total assets under management of C$370 billion, says it will look at “very early-stage” projects and development companies, including opportunities in wind and solar and in India and emerging markets.

Bruce Hogg, head of power and renewables at CPPIB, told BloombergNEF that his almost-20-strong team, formed in December 2017, invested more than expected in its first year. “We found very quickly that we had a differentiated capital product.” He added: “We would like to be doing that kind of potential volume – on average – on an annual basis.”

Q: It has been 12 months since the power and renewables group was set up. What has been your experience so far? Have the targets you began with a year ago been met or been exceeded?

A: The establishment of a dedicated group shows CPPIB’s recognition of the significant growth that has been seen in the power and renewables space, and how significant the capital need is expected to be over the next few years. Our key objective in our first 12 months was to define global and regional strategies, figure out the best fit for our capital in what can sometimes be a crowded market, put together the team, and then move forward to look at opportunities.

We exceeded our targets, because what we found very quickly was that we had a differentiated capital product, and that led to us completing over C$3.5 billion of transactions in our first year which is well in excess of what we had thought we would do.

We completed a transaction in Brazil at the very beginning of the year [Votorantim Energia joint venture, C$272 million]. We then picked up on ongoing conversations with NextEra Energy Inc. and bought a portfolio of operating assets in Canada and then, very quickly thereafter, announced the transaction with Enbridge Inc. to buy over C$2 billion of equity in operating and in-construction assets across North America and Europe. So, we literally hit the ground running and never stopped running.

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