India to be leading source of global growth for decades: CPP’s Suyi Kim
3 min read . Updated: 28 Feb 2023, 12:51 AM IST
PremiumMumbai: CPP Investments is one of the biggest pension fund investors in India, having invested across private equity, infrastructure, real estate and other asset classes
Mumbai: CPP Investments is one of the biggest pension fund investors in India, having invested across private equity, infrastructure, real estate and other asset classes. In an interview, Suyi Kim, senior managing director and global head of private equity explained why at Canada’s largest pension fund manager is bullish on India, and the themes it is investing in. CPP’s India investments form about 4% of its global portfolio as of 31 December. Edited excerpts:
How have the global headwinds changed your investment strategy in Asia? Has India gained more favour over other Asian economies?
Our broader investment thesis for investing in Asia, in particular emerging Asia, has been urbanization and consumption driven by a growing middle class. This remains the case despite some macro challenges. As a long-term, global investor, we diversify across a wide range of asset classes and geographies to mitigate concentration risk and deliver a stronger and more resilient portfolio. India is one of the key markets for us globally and also one of our largest in terms of employees on the ground. We believe India will be a leading source of global growth for decades to come, supported by positive demographics and a growing middle class.
On the private equity side, which sectors are you betting more on? Any sectors that you are looking to go slow on in the near term?
We do not “bet" on sectors. Rather, we invest in themes that we think will perform over the long run. In Asia, for example, we have been investing in the consumption and urbanization theme and that’s across many sectors: consumer retail, education, logistics/real estate, healthcare, technology and more. That’s also evident in our investments in India – we have investments across real estate, infrastructure, public and private equities, funds and co-investments and credit. We will continue to look at companies in different sectors that align with our long-term investment thesis.
The recent episode at a major Indian conglomerate has again raised the spectre of poor governance standards. What’s your view of corporate governance standards in India?
I can’t comment on specific companies. We view sustainability-related, or ESG, considerations as business-critical. We have been incorporating these considerations into our investment activities for more than 10 years. Corporate governance is one of many areas that we evaluate for potential direct and public equity investments. We believe that good corporate governance enhances long-term shareholder value. Asia, including India, has made great strides in corporate governance over the years but more can always be done.
As an investor and shareholder, we actively promote the adoption of improved governance practices at our portfolio companies. For example, we have Proxy Voting Principles and Guidelines for our public portfolio companies. These provide guidance to portfolio companies on how we are likely to vote across a number of key issues including governance, board diversity, executive compensation and sustainable investing including climate change. For the year ended June 30, 2022, we conveyed our views at 3,817 companies’ annual and special meetings of shareholders and voted against the management in nearly 12% of the cases.
Given the slowdown in the tech sector, how are you looking at late-stage tech investments in India?
We take a long-term view on our investments. Technology is more than just a singular sector – it is extremely broad, and you can argue there is a tech element in every industry now. It will continue to play a critical role in our lives. India has been at the forefront of some of the technology sectors. For example, the IT services industry was invented in India more than 25 years ago and it is still thriving. There continues to be a lot of investing interest behind it.