Canada's largest pension fund, Canada Pension Plan Investment Board, Toronto, had C$13 billion of net assets parked in Australia, or about 2.5% of its C$523 billion total assets, as of its fiscal year ended March 31, according to a spokesperson.
The firm first set up an office in Sydney in 2017.
CPP's Australian investments are spread across infrastructure, real estate, public and private equities, and investment funds, although the bulk of investments is in infrastructure and real estate, said the spokesperson.
Some of CPP's key investments in Australia include toll road projects NorthConnex and WestConnex as well as the private rail freight operator Pacific National.
CPP also owns stakes in real estate investment trust Ingenia Communities Group, property developer Mirvac Group, data center operator NEXTDC Ltd., and real estate group Dexus Office Trust Australia.
Georg Inderst, a London-based independent adviser to pension funds, institutional investors and international organizations and principal at Inderst Advisory, indicated that Canadian pension funds have a special focus on global infrastructure investing.
Large Canadian pension plans such as Ontario Municipal Employees' Retirement System, Toronto, Ontario Teachers' Pension Plan, Toronto, CPP, Public Sector Pension Investment Board, Montreal, CDPQ and others have been leading in overseas investments, initially with large stakes in transport such as ports, airports and toll roads, utilities and telecommunications, later followed by other sectors such as renewable energy and digital infrastructure, among others, he said.
OMERS, OTPP and PSP have total net assets of C$127.4 billion, C$249.8 billion and C$243.7 billion, respectively.
"This (has been) driven by the usual factors such as seeking new investment opportunities, higher returns and broader diversification internationally," Inderst said.
"What is different with infrastructure is that, when you are a large asset owner, you typically cannot find enough suitable, large investment opportunities at home, or you find only few sectors that are available or investable at home. So, Canadian pension plans in particular are often 'outsizing' the domestic infrastructure market supply. Going global is necessary to avoid excessive concentration in infrastructure portfolios."
The "Canadian model" of direct investing in less-liquid assets, Inderst noted, is being imitated by asset owners across the globe.
"These days, it often happens in some form of co-investments with other international investors," he added.
As a result, countries such as the U.K. and Australia, which historically have a large number of privatized assets in energy, transport, telecom, are attractive targets.
Canada's pension funds are major infrastructure investors in a global context, said Raffaele Della Croce, co-director of Singapore Green Finance Centre, advanced research fellow at Imperial College London and ex-senior economist at the Organization For Economic Cooperation And Development.
"Australia represents one of the largest market for infrastructure," he noted. "The largest Canadian pension funds over the last 20 years have been constantly increasing their allocation (there)."
The Australian government supports the energy transition and this will likely result in greater investments in the electricity pipeline, and in major renewables, transmission and storage projects, he added.