Canada’s Ontario Teachers’ Pension Plan, which expects interest rates to stay lower for longer as policymakers deal with economic fallout from the ongoing coronavirus pandemic, sees investment opportunities in Asia and emerging markets amid the crisis.
The pension fund is placing its bets on businesses such as data centres and companies developing self-driving cars and related technologies, according to Ben Chan, the senior managing director for Asia Pacific.
“We are working with very patient capital with a much longer-term view [which] is actually a very good way of looking through the pandemic. I believe ‘lower and longer’ will stay, so [as an investor] you will have to think longer [term] and aim higher,” Chan told participants of the Asian Financial Forum 2021 held in Hong Kong on January 19.
Speaking at a panel session at the conference, he listed investment opportunities in four types of businesses, including those which have been accelerating through the pandemic.
“Last year, we invested in data centres, we took a position in autonomous driving, we have also invested in traditional food business that actually pivoted to the emerging model, so that it can move ahead of competition,” he says.
Then there are businesses that have remained resilient through the pandemic and which the pension fund believes will become more valuable in the long term. “An example is the pathology business that we invested in New Zealand last year,” Chan says.
Ontario Teachers’ and NZ Super Fund each bought a 50% stake in Asia Pacific Healthcare Group last August from Australian healthcare provider Healthscope, a deal that values the New Zealand-based company at over NZ$550 million (US$355.61 million).
The other two businesses that Ontario Teachers’ is focusing on have a different kind of profile. One is companies that are currently weighed down by the pandemic but are expected to recover when the crisis passes.
“The challenge here is to pick a winner that will live through [the pandemic], and make sure that you structure it at a right entry valuation and there’s sufficient protection around the business in the short term,” Chan says.
And finally, there are businesses that will come after the pandemic. “This could be companies that are offering new energy solutions, or new healthcare solutions,” he says.
Ontario Teachers’ had C$204.7 billion ($161.17 billion) of assets under management as of end-June 2020.