On Tuesday, the Canada Pension Plan Investment Board (commonly known as CPP Investments), the (approximately) $476 billion fund that manages assets on behalf of 20 million Canadian pension holders, announced the creation of a dedicated Sustainable Energy Group (SEG).
The new investment group will pool CPP‘s expertise in renewables, conventional energy and new technology and service solutions. SEG will generate compelling investment opportunities for the Fund, positioning (it is hoped) CPP Investments as the world’s leading energy investor. By combining CPP’s Energy & Resources (E&R) and Power & Renewables (P&R) groups, SEG will have approximately $18 billion in assets, making it highly competitive and flexible in the large and dynamic global energy sector.
SEG will hold a diversified portfolio primarily comprised of long-term tangible assets, including renewable energy sources such as wind, solar and hydro, as well as conventional power, upstream oil & gas, energy midstream, carbon capture and Liquefied Natural Gas (LNG). It will also invest in areas of innovation, technology and services to the energy industries and will manage agriculture investments
In a formal announcement about the investment group on Tuesday, CPP cited the 2020 Bloomberg New Energy Outlook report, which estimates more than $15 trillion will be invested in new power capacity by 2050. SEG is well positioned to pursue a variety of opportunities in this, and the broader sustainable energy market, having combined expertise in conventional energy, renewable energy, carbon capture as well as emerging and disruptive opportunities in adjacent tech and innovation firms.
“The energy sector is one of the most important enablers of the global economy and is composed of a wide spectrum of suppliers from conventional to renewable. Along our unique investment horizon, we see a dramatic opportunity to invest in, and support, the evolution and innovation occurring across the sector,” says Deborah Orida, Senior Managing Director and Head of Real Assets, CPP Investments. “CPP Investments is exceptionally well placed to be among the winners, in part through our partnership model alongside companies willing to grasp the future and forge ahead.”
Bruce Hogg will lead SEG as Managing Director, Head of Sustainable Energy Group, having served most recently as Managing Director and Head of Power & Renewables and has more than two decades of real assets investing experience. Hogg is a 14-year veteran of CPP Investments, having led the expansion of its infrastructure team’s global business. More recently, he led the team that built a P&R portfolio of more than $9 billion in three years.
“The creation of the Sustainable Energy Group with significant, flexible capital positions us extremely well to pursue the best market opportunities across the entire energy spectrum. This, coupled with a deep, highly experienced team, will allow SEG to generate significant long-term value for the Fund,” Hogg said in a comment on the group’s official launch.
Last month, CPP Investments acquired a significant minority stake in Brazil’s third-largest private water and sanitation services provider Iguá Saneamento S.A., investing alongside another Canadian pension fund manager, Alberta Investment Management Corporation (AIMCo) and IG4 Capital Group.