Covid-19 impact: Global pension funds pause India investment

Mumbai: Top global pension funds have suspended India investment plans until they come to grips with the damage Covid-19 does to global and local economies, and their portfolios stabilise amid extreme market volatility and uncertainty.
Ontario Teachers’ Pension Plan (OTPP), Canada Pension Plan Investment Board (CPPIB), Australian Super and Caisse de Dépôt et Placement du Québec (CDPQ), among others, had slated billions of dollars in India directly, via private equity (PE) or other funds, but have either put plans on hold or are reconsidering, two people with direct knowledge of the matter said.

“Some pension funds had given commitments to PE investors or were planning to invest in certain assets directly; all that has come to a screeching halt as this set of investors are focusing inwards,” one of them added.

Canadian pension funds were looking to invest in renewable energy and private debt, people in the know told ET. “All commitments to investments in illiquid assets — direct or through a fund — have been put on hold,” said a PE fund manager.

These pension funds are now focusing on their domestic investments and relief work, but say they continue to have “long-term” plans for India. “India is an attractive investment destination for Ontario Teachers,” said Ben Chan, regional managing director, Asia Pacific, at OTPP. “We monitor short-term trends and pressures, but our long-term view is that the bulk of future global growth will come from outside of North America, which means we must look abroad for investment opportunities.”

CPPIB refused to comment on the story while CDPQ and Australian Super did not respond to ET’s questionnaire as of press time on Monday.

Industry experts said going ahead with India investments doesn’t make sense for most of the funds, considering the Covid-19 situation and abrupt drop in India’s economic growth rate.

For instance, “A pension fund would lose out on 15-20% of C-category customers who can no longer afford a fancy address,” said an investment banker specialising in real estate, on the condition of anonymity.


“It is likely that some sovereign wealth funds may be asked to support their governments at this time of crisis,” said Sanjeev Krishan, partner and leader, deals, PwC India.