Why Canada's pension plan is standing by its $52-billion bet on China while other investors flee
In 2011, three years after opening an office in Hong Kong, the Canada Pension Plan fund invested in a fast-growing e-commerce company in the city of Hangzhou, China, that would have been unfamiliar to most Canadian pensioners at the time.
Alibaba Group Holding Ltd., co-founded by an internet entrepreneur named Jack Ma, was staking out ground similar to Amazon.com Inc. and shot to prominence a few years later when it raised US$25 billion in the largest IPO in U.S. history.
CPP Investments, the professional organization that manages the CPP fund, then under the leadership of Mark Wiseman, had continued to invest in Alibaba as its star rose and the position became the cornerstone of a strategy to take advantage of red-hot growth predicted for China, one of the global economies expected to be in the “fast lane” for years to come, according to the fund’s 2015 annual report.
In interviews that year and the next, Wiseman spoke about how the successful Alibaba investment resulted from having feet on the ground in the region as well as a commitment to forge local relationships that would help the Canadian pension understand China’s economy and its people.
His successor, Mark Machin, who had spent much of his career in Asia including a stint there with Goldman Sachs Group Inc. before joining the Canadian pension and serving as chief executive between 2016 and early 2021, talked about doubling the fund’s commitment to China by 2025 and his lieutenant in Hong Kong mused about opening an office in mainland China.
But while the fund was increasing its investments in China, Alibaba’s trajectory took a dramatic turn.
After drawing the ire of China’s powerful regulators with a comment that was taken by some to be critical, Jack Ma
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