OTPP Paused Future Direct Investments In Private Assets In China

According to a foreign media report on Jan. 31, Ontario Teachers’ Pension Plan (OTPP), Canada’s No. 3 pension fund, stated on the same day to pause its future direct investments in private assets of Communist China. The statement said OTPP manages C$242.5 billion of total assets and the current exposure to China represents about 2% or C$5 billion of its net investments.

OTPP decided to stop the direct investments into private assets of China, including Zuoyebang (an online education startup company), Xingsheng Preference Electronic Business Limited (a community group-buying company), and Chongho Bridge (a microfinance company). However, OTPP will continue to invest in public markets in Xi’s regime and indirectly in private markets through fund partners and external managers. Ontario, Canada’s most populous province, has 333,000 retired and active teachers. OTPP manages a huge amount of its retirement fund. Its official website says the OTPP’s net assets by 2030 are expected to reach C$300 billion.

A source close to the firm revealed that geopolitical risk is one of the key risk factors in the OTPP’s decision. However, given that Beijing has been confronting both internal and external political, economic, diplomatic, and military bitter situations, it seems that OTPP’s investment risks cannot be fully mitigated in other fields if it only lifts up the direct investment in private assets of Communist China.