• Canada’s massive pension fund plans to invest up to a third of its funds in emerging markets over the next five years and India is an important destination, the fund’s Asia Pacific head, Suyi Kim, told CNBC.
• Domestic consumption, technology and increasing demand for infrastructure to support the growth underpin many of the investment themes and opportunities that CPPIB looks at in India, Kim said.
• The growth rate of South Asia’s largest economy has taken a hit over the last few years following important currency and tax reforms.

Canada’s massive pension fund plans to invest up to a third of its funds in emerging markets over the next five years and India is an important destination, according to a senior executive. 

The Canada Pension Plan Investment Board (CPPIB) manages about 434.4 billion Canadian dollars ($329.75 billion) as of June 30. A bulk of its investments are in North America — around 34% of total assets are allocated in the United States — followed by Asia. 

“We expect to invest up to one third of the Fund in emerging markets by 2025 and India is a key component of that,” Suyi Kim,  CPPIB’s Asia Pacific head, told CNBC by email.

“Our investments in India span different asset classes including infrastructure, real estate, public and private equities, funds and co-investments and credit,” Kim said, adding, “We see domestic consumption, technology and increasing demand for infrastructure to support the growth underpinning many of the themes and opportunities we look at in India.”

India’s growth issues
The growth rate of South Asia’s largest economy took a hit over the last few years following important currency and tax reforms that were said to have disproportionately affected small businesses and people in the informal sector.

The coronavirus pandemic this year dashed early signs of recovery as India went into a nationwide lockdown between late-March and May as part of its efforts to slow the infection’s spread. Still, India is now the second most-affected country in the world behind the United States, with more than 5.9 million reported cases and over 94,000 deaths.

Growth for the three months from April to June fell 23.9%.

The financial sector — already in crisis for several years — faces an erosion of loan growth and higher credit costs as it prepares for a rise in bad debt from retail and corporate borrowers. Experts previously told CNBC that if the sector decides to stop lending to borrowers with low credit scores, or charge them a much higher interest on loans, it could delay India’s economic recovery.

“The ongoing credit issues in the financial services industry, which have been exacerbated by the pandemic’s impact on the economy, also present interesting investment opportunities to provide long-term, stable capital to select financial institutions and companies to finance India’s next growth cycle,” CPPIB’s Kim said.

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