SAO PAULO, Aug 26 (Reuters) - After nearly two decades

in Latin America, the Canada Pension Plan's managers still see

room to expand in the region and especially Brazil, where they

believe a booming clean energy sector and water concessions

offer long-term opportunity.

CPP Investments, the public pension plan's asset manager,

has about C$36 billion ($26.71 billion) under management in

Latin America, or about 5% of its global portfolio, in sectors

from electric utilities and sanitation to real estate, telecoms

and logistics.

Although the world's seventh largest pension fund has no

geographical targets, Chief Executive John Graham told Reuters

in a rare interview he expects the region's share of the

portfolio to hold steady or even rise.

"We look for markets where we believe we can scale assets,

develop relationships and partnerships," Graham said at CPP

Investments' offices in the Sao Paulo financial district on

Friday.

Brazil accounts for nearly half of the fund's investments in

Latin America. Among the key assets is Auren Energia,

a top power generator and a major player in energy trading that

CPP formed in partnership with Brazilian investment holding

company Votorantim.

"I would say, globally, the energy transition is probably

one of the trends for the past three or four years that we've

been most excited about," Graham said.

Abundant hydroelectric resources and wind and solar power

potential have made Brazil a regional leader for renewable

energy, despite growing pains in some areas where generation has

outstripped the national grid's capacity.

Brazil is also advancing toward universal water and sewage

treatment, with many state governments opening public utilities

to private investment and control, attracting attention from CPP

and others.

"This is a sector that is going through an important

transformation, from being state owned to going to the hands of

sophisticated private operators," said Ricardo Szlejf, head of

Latin America infrastructure at CPP Investments.

The fund is majority shareholder of water and sewage

operator Igua Saneamento and has a stake in

Equatorial Energia, the lead investor in the

privatization of Sao Paulo's Sabesp, one of the

largest water and sewage utilities in the world.

CPP Investments also made a direct investment in Sabesp,

underscoring its interest in the sector, which offers stable and

predictable cash flows, crucial for pension funds aiming to

generate sustainable returns over decades.

As part of its rapid expansion, the fund has diversified

across the globe, motivating its 2006 entry into Latin America,

which Graham says has paid off.

CPP Investments recently reported a 10-year annualized net

return of 9.1%, and Latin America has performed nearly in line

with the global portfolio, in Canadian dollars, he said.

"I think what has gone well is being patient, having

flexible capital and a long-term perspective," Graham said,

adding that the fund has also leaned heavily on its local team,

currently 36 employees in Sao Paulo.

($1 = 1.3478 Canadian dollars)