The Chinese national flag is seen in front of Central Financial District on October 1, 2022 on Chinese National Day in Hong Kong, China. Portal/Tyrone Siu/File Photo Acquire License Rights
HONG KONG, Sept 1 (Portal) – CPP Investments, Canada’s largest pension fund, has fired at least five investment professionals at its Hong Kong office as the company pulls out of business in China, three people familiar with the matter said.
Most were part of the fund’s private equity team and were briefed early last month, according to two of the people. The departures have not yet been reported.
They added that a chief executive in charge of the company’s Greater China real estate portfolio had been told weeks earlier that he was losing his position.
The fund has suspended new investments in China, including direct investments as well as investments in China-focused fund managers, discouraged by the country’s faltering economic recovery and tensions with the West, people said.
They were not allowed to speak to the media and refused to be named.
CPP, which employs more than 150 people in Hong Kong, its Asian hub, declined to comment.
In its most recent annual report, the company indicated that the evolving relationship between Canada, the US and China would be a factor as it reviewed its approach to emerging markets.
Political tensions between Canada and China have been very tense in recent years. In general, the business climate for foreign firms in the world’s second-largest economy has also weakened due to increased trade and political tensions with the US, which have led to Washington imposing export controls on key technologies such as some semiconductors.
US Commerce Secretary Gina Raimondo noted during her visit to China this week that US companies have complained that China is no longer investable, citing fines, crackdowns and other measures that have made doing business in China risky.
Other Canadian pension funds are also withdrawing from China.
The Ontario Teachers’ Pension Plan (OTPP) shut down its Hong Kong-based China Equity investment team in April, Portal reported. Canada’s second-largest pension fund, Caisse de dépôt etplacement du Québec (CDPQ), has also stopped doing private business in China and will close its Shanghai office this year, the Financial Times reported in June.
China accounts for 9.8% of CPP’s total investment, according to Michel Leduc, a senior CPP executive who addressed a parliamentary committee examining Canada-China relations in May.
At the time, he said China was an “important source” for CPP’s portfolio. CPP had $575 billion in assets under management globally at the end of June.
China-focused private equity funds have raised just $11.6 billion this year. That compares to $74 billion raised in all of 2022, according to data from research firm Preqin.
The numbers are a far cry from a peak in 2016, when more than 1,500 China-focused funds raised around $300 billion.
So far this year, companies worth $3.2 billion have been acquired by private equity in China. That’s up from $2.7 billion last year, but still well short of 2021’s $49 billion, data from Dealogic shows.
Reporting by Julie Zhu and Kane Wu; Edited by Edwina Gibbs
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