CPPIB eyes long-term investing opportunities in Korea

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South Korea is brimming with long-term investment opportunities as sustainability-driven innovations crystalize in Asia’s fourth-largest economy, a high-ranking official of public pension scheme Canada Pension Plan Investment Board said Wednesday.

The pandemic has not only changed the way people live, but also prompted a technology-led transformation across the Asia-Pacific region, said Suyi Kim, head of Asia Pacific at CPP Investments during a virtual conference hosted by the Seoul-based Institute for Global Economics.

“We will continue to invest in Korea across public equities, private equities and real estate,” said Kim, who oversees C$134 billion ($111.2 billion) assets deployed to the Asia-Pacific region. This takes up 27 percent of CPP Investments’ total assets under management.

Technologies in the field of e-commerce, telehealth, educational technology and financial technology are thriving, but its investment opportunities will not be limited to such sectors, and instead to infrastructure that enables seamless operations of such companies.

The latest example is CPP Investments’ decision to double its investment in its joint venture with ESR to $1 billion, which goes to the portfolio of 12 income-producing logistics assets in the Greater Seoul area. The basket of assets are publicly traded in the form of a real estate investment on the Korea Exchange, as the first listed REIT in Korea solely targeting industrial assets. Other than the joint venture, Korea Income JV, CPP Investments and ESR have collaborated on two other joint ventures focused on the Korean logistics sector since 2015.

This stems from an idea that Korea was thriving in “sectors that are enabling these innovative companies, such as industrial real estates like warehouses, which are supporting e-commerce businesses including companies in Korea,” Kim said.

The investment veteran also said that Korea’s financial regulator has been playing a critical role in nurturing an environment to promote green finance and gender diversity of listed companies, distinguishing itself from peers across the Asia Pacific region.

“I understand that FSC convened the meeting of its green finance task force last year and really developed a great finance regulatory environment, which is great to see,” Kim said.

Kim added that she was pleased to learn that the state regulator Financial Services Commission, is looking at further changes of the stewardship code to strengthen fiduciary duties especially related to environmental, social and governance factors.

Gender diversity is also building in Korea, as new regulations are requiring Korean companies with more than 2 trillion won ($1.8 billion) in assets to have more than one gender on their board.

”Last year, we voted against more than 300 public portfolio companies for failing to have women on board. Ninety-five percent of them were in Asia Pacific,“ Kim said. “I think investors can expect new opportunities from the region’s climate changes initiatives, and from more access to green finance market and to the green economy.“

CPP Investments was overseeing C$497.2 billion-worth of assets across the globe as of March.

By Son Ji-hyoung (consnow@heraldcorp.com)