British Columbia Investment Management Corp, Canada’s fourth largest pension system, invested C$5.3 billion ($4 billion; €3.38 billion) in the private equity market last year, a record amount driven in part by a strategic push toward direct deals.

The Victoria-headquartered pension deployed C$1.6 billion to direct investments and co-investments last year, according to its 2019-20 annual report published Monday. The figure, which is lower than the amount it deployed the previous year, shows the share of PE portfolio assets held by directs rose to 38 percent, from 32 percent.

The money went into eight transactions, several of them of high profile. BCI in 2019 invested alongside Ares Management and Leonard Green & Partners in Press Ganey, a US provider of patient-satisfaction surveys to hospitals. The group acquired the business from EQT for more than $4.2 billion, sister title PE Hub reported.

Other 2019 investments include UK specialty insurance broker BMS, backed by BCI and Preservation Capital Partners. BCI also joined with ATL Partners to acquire US metal finishing company Valence Surface Technologies.

BCI’s goal is to split its PE portfolio roughly evenly between directs and funds, according to a background document. Directs’ share has doubled over the past four years.

The pension, which is aiming for more exposure to direct deals, still commits most of its capital to funds. Last year it pledged C$3.7 billion to 18 new and core fund relationships, up 23 percent from 2018. It also sold interests in 10 vehicles for C$800 million.

Fund relationships reflect a range of brand-name general partners, a 2019 inventory shows. They include Advent International, AEA Investors, Bain Capital, Brookfield Asset Management, Castlelake, CVC Capital Partners, Francisco Partners, Hellman & Friedman, PAI Partners and TPG.

BCI’s PE strategy emphasises global buyout and growth equity opportunities, its website shows. It is also sector-focused, targeting consumer and retail, financial and business services, healthcare, industrials and technology. Top-tier funds are selected in part to help create access to large direct opportunities where BCI can assume stakes exceeding 25 percent.

Directs key to returns

The PE portfolio’s net assets stood at C$17.9 billion at the end of March, up 38 percent from the same time last year, according to the annual report. Private equity accounts for 10.4 percent of total assets.

BCI attributes recent PE performance to direct activity’s greater weighting in the portfolio. The five-year annualised return was 17.1 percent at the end of December, ahead of a 12.4 percent benchmark. The one-year return was 16.2 percent against a benchmark of 16.9 percent.

Jim Pittman, BCI’s global head of private equity, leads the strategy. Pittman joined in 2016 from Public Sector Pension Investment Board, where he worked for more than a decade as a managing director, private equity. Appointed to his role last year, he oversees a team of 47 professionals.

Founded in 1999, BCI was modelled after organisations such as Caisse de dépôt et placement du Québec, aggregating for investment purposes the assets of multiple British Columbia pension funds and other pools. Its largest members include BC’s Municipal Pension Plan, Public Service Pension Plan and Teachers’ Pension Plan.

BCI managed net assets of more than C$171 billion at the end of March.

The pension declined to provide a comment for this story.

This story originally appeared on sister title Buyouts.