Canada Pension Giant Interested in Energy Sector, Not Aramco IPO
(Bloomberg) -- The Canada Pension Plan Investment Board isn’t shying away from investing in Canada’s beleaguered energy sector, though it’s passing on Saudi Aramco’s massive stock sale.
“We will look at traditional oil and gas, whether it’s pipelines or other resources,” in addition to renewables, Mark Machin, chief executive officer of Canada’s biggest pension fund said in an interview with BNN Bloomberg in Toronto. “As long as we can understand all the risks behind the investment, that the regulation may change, that preference may change, that geography may change. If we can understand those and can still be compensated sufficiently, then we’ll continue to make that investment.”
The gloom hanging over the Canadian energy industry was intensified after Encana Corp. -- one of its marquee companies that was born out of the 19th-century railway boom -- announced plans to move its headquarters to the U.S. and drop the link to Canada from its name. The sector has suffered from a lack of pipeline space that has choked off prospects for growth, prompting foreign companies to ditch more than $30 billion of assets in the past three years.
While Machin acknowledged climate change is a “multi-faceted” and “very complicated” risk, he highlighted that his mandate is to maximize returns without undue risk of loss.
“It’s important as an investor that we understand all of those risks and how fast the energy transition is going to happen,” he said. “When we look at every investment, we understand all the risks that climate change could present to that investment. We are able to understand the risks in a more granular way now because of some of the tools and the disclosure practices that have really improved.”
Machin, whose fund manages more than C$400 billion ($305 billion) in assets, said Saudi Aramco’s jumbo IPO isn’t on his radar because the company is not in a strategic geographic market for the fund.
“We understand what the company has to say,” Machin said. “But when we look at emerging markets, we’re very focused on the emerging markets that we invest in. We are not invested in the Middle East. We want to invest in markets where we’re going to do a lot of different things, infrastructure and real estate and public markets and private markets and credit and equity.”
©2019 Bloomberg L.P.