Impact of Covid-19: Global pension funds are pausing India investment

Mumbai: Global summit pension funds have suspended India investment plans until they catch the damage Covid-19 makes towards global and local economies and their portfolios stabilize 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) had estimated billions of dollars in India directly, through private equity (PE) or other funds, but have either put plans on hold or are considering it, said two people with direct knowledge of the case.

“Some pension funds had made commitments to PE investors or were planning to invest in certain assets directly; anything that has stopped as this set of investors focuses inward, ”one of them added.

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

These pension funds are now focusing on their domestic investment 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, Asia Pacific Regional Executive Director at OTPP. “We monitor short-term trends and pressures, but our long-term view is that most of the future global growth will come from outside North America, which means we need to look abroad for investment opportunities.”

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

Industry experts said it does not make sense for most of the funds to move forward with India investment, given the Covid-19 situation and a sudden decline in India’s economic growth rate.

Eg. “A pension fund loses 15-20% of category C customers who can no longer afford a fine address,” said a real estate investment bank, on 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 Manager, Offers, PwC India.

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