By
David G. Barry
Despite
a tough start to its fiscal year, the Canada Pension Plan Investment Board (CPP Investments) did not shy away from deploying capital.
Since April 1, the CA$523 billion (US$409 billion) investment management
organization has deployed more than US$5 billion [SO1] in private equity, credit, and real assets –
roughly half in funds and half in co-investment and follow-on transactions.
For the quarter ended June 30, CPP Investments – Canada’s largest pension plan –
reported a negative 4.2% net return and a decline of net assets of US$12.5
billion. It said it had a net loss of US$18 billion offset by contributions to
the fund of $5.48 billion.
CPPIB said the negative 4.2% outperformed returns for leading global indices,
many of which had double-digit declines.
Over the past five years, it has had a net return of 8.7% and a 10-year net
return of 10.3%.
CPP Investments, which manages the capital of 21 million contributors and
beneficiaries of the Canada Pension Plan, had a net return of 6.8% for the
fiscal year ended March 31.
CPP Investments said the fund’s quarterly results were driven by losses in
public equity strategies due to the broad decline in global equity markets. It
said that private equity, credit, and real estate contributed modestly to the
loss. Gains by external portfolio managers, quantitative trading strategies,
and investments in energy and infrastructure contributed positively to the
results, it said. CPP Investments also saw US$2.4 billion in foreign exchange
gains.
In a statement, CPPIB’s president and CEO, John Graham, said the fund’s first fiscal quarter “was not immune” to
what he described as “the most challenging first six months of the year in the
last half century” for financial markets. But he said that CPP Investments’ “active
management strategy – diversified across asset classes and geographies –
moderated the impact on the fund, preserving investment value.”
Graham added that CPP Investments expects the “turbulence” to “persist
throughout the fiscal year.” He said that the fund’s “resilient portfolio was
designed to create value over the very long term as demonstrated by our
continued strong 10-year net return, even as we expect to experience
double-digit percentage losses one year in 20.”
Among the fund commitments it made during the first five months of its fiscal
year were (all numbers in U.S. dollars:
·
$300
million to the Hillhouse Real Asset Opportunities Fund, which aims to invest in
the new economy real estate sectors in China focusing on life science, data
centers and logistics.
·
$205
million to TDR Capital V, which is focused on mid-buyout investments of
companies based in or with significant operations in Europe.
·
$150
million to NewQuest Asia Fund V, which will focused on secondary transactions
involving middle-market companies and general partners within emerging Asian
Markets.
·
$150
million commitment to Oak Hill Capital Partners VI, which will invest across
the industrials, media & communications, business services and consumer
sectors in the U.S.
·
$400
million to Apax XL, a private equity firm focused on upper middle-market and
large cap transactions.
·
$333
million to Sequoia Capital’s 2022 APAC fundraise, comprising commitments to the
Sequoia China funds and the Sequoia India/South East Asia funds.
·
$160
million to Lumina Strategic Solutions Fund, a Brazil-focused special situations
credit investment manager.
·
$50
million to Radical Fund III, a venture fund focused on AI opportunities in
Canada and the United States.
·
$100
million to Trustar Capital V, the private equity affiliate of CITIC Capital,
which is focused on control-oriented buyouts in Greater China.
·
$410
million to EQT X.
·
$100
million to Kimmeridge Fund VI, a U.S.-based alternative asset manager focused
exclusively on the energy sector.
CPP Investments also invested:
·
$50
million in a co-investment alongside Silver Lake for a 4% stake in Entrata, a developer
of property management software that focuses on multi-family residential
apartments.
·
$120
million in a co-investment alongside CVC Capital into Sajjan India Limited, a
specialized agrochemical manufacturer in India, for an up to 17% stake.
·
$35
million in a co-investment alongside CVC Capital into Razer Inc., a global
lifestyle brand for gamers, providing gaming peripherals, gaming laptops and
desktops, gaming accessories and software solutions worldwide.
·
$50
million in a co-investment in Anaplan alongside Thoma Bravo for an approximate
0.5% stake. Anaplan is a U.S.-based provider of cloud-based planning and
analytics software.
·
$824
million additional to Renewable Power Capital to acquire 100% of four onshore
wind farms in central Sweden. RPC is CPP Investments’ European onshore
renewables platform.
·
And
an additional $548 million to Indlnfravit Trust, its Indian toll roads
portfolio company. Indlnfravit used the capital to acquire five operating road
concessions from Brookfield Asset Management for $685 million.
·
An
additional $225 million to KDV II, its second development joint venture with
partners ESR and APG. KDV II invests in and develops a best-in-class industrial
and warehouse logistics portfolio in the Seoul and Busan metropolitan areas in
South Korea. CPP Investments holds a 45% stake in the joint venture.