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Canada Pension Plan ramping up direct energy investments

updated with correction

Canada Pension Plan Investment Board, Toronto, is investing directly in energy, expecting to invest between C$1 billion ($750 million) to C$2 billion a year through 2020, said Avik Dey, managing director, head of natural resources at the C$298.1 billion Canada Pension Plan, Ottawa, at the PensionBridge annual conference on Wednesday.

Although CPPIB doesn't set asset allocation targets, the group's energy investment could amount to C$10 billion to C$12 billion by 2020, Mr. Dey told the audience during a panel discussion on energy. CPPIB currently has $4.5 billion in the three-year-old portfolio.

CPPIB's direct energy-focused portfolio in oil and gas includes investment in midstream, renewables, and metals and mining, Mr. Dey said. CPPIB also invests in upstream oil and gas projects in North America.

The portfolio is designed to sit between real assets and private equity. Unlike an infrastructure manager that invests in energy assets, CPPIB's energy portfolio takes commodity risk.

CPPIB can take on risk that oil and gas prices will rise or fall because the pension fund owns the projects and can adjust production in response to changes in oil and gas prices, Mr. Dey explained in an interview.

CPPIB invests in natural resources, in part, for diversification and as an inflationary hedge.