May 21, 2015 / 7:39 PM / in 2 years

Canadian public pension fund looking at deals in energy sector

TORONTO (Reuters) - The Canada Pension Plan Investment Board (CPPIB), one of the world’s biggest dealmakers, is looking at deals in the energy sector as a selloff in the price of oil makes valuations more appealing, its top executive said on Thursday.

The fund, which delivered gross investment returns of 18.7 percent for its fiscal 2015, is evaluating a number of opportunities in Western Canada, Chief Executive Officer Mark Wiseman said in an interview.

Lower oil prices have resulted in large haircuts for energy stocks, making them attractive to some asset managers.

“It’s our home market. We have a bullish long-term view on energy prices, and so I think you will see CPPIB continuing to put the focus on potential investments in the Western Canadian basin,” Wiseman said.

“Ultimately, we think the opportunity for us is looking at companies that have fundamentally high-quality assets but potentially have issues with their balance sheets.”

Wiseman declined to comment on how much the fund was prepared to spend but noted that it had enough capital to deploy for the right opportunity.

“We would look at financing anywhere from a $100 million to in well excess of $1 billion in a single transaction,” he said.

The company also recently boosted its natural resource team in Toronto, he said.

ROBUST RESULTS

The manager of Canada’s public pension fund ended its fiscal year with net assets of C$264.6 billion ($216.81 billion), compared with C$219.1 billion a year ago.

CPPIB’s rate of return over a 10-year period reached 8 percent in the year, hitting an all-time high.

The fund manager has been diversifying across sectors and geographies in order to limit risk.

“We’re going to continue, in the long run, to diversify the portfolio globally,” Wiseman said, adding that CPPIB was looking to build capabilities in markets like Latin America, India and China.

“Over the long run you’ll see a larger proportion of our portfolio attached to those regions with higher expected growth.”

Reporting by John Tilak; Editing by Bernard Orr and Lisa Shumaker

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