CPPIB more than doubles co-investment spending

Canada Pension Plan Investment Board has more than doubled its private equity co-investment activity after integrating its direct and fund investing processes.

The C$392 billion ($292 billion; €260 billion) fund closed 26 co-investments representing C$3.1 billion of invested capital in the fiscal year ending 31 March, up from 12 investments totalling C$1.4 billion the previous year, according to its annual results on 16 May.

“The integration of the passive co-investments strategy with Direct Private Equity (DPE) and Private Equity Funds has increased the number of opportunities for passive direct investments,” the fund said.

CPPIB’s direct private equity portfolio comprised 80 investments valued at C$32.8 billion as of 31 March, compared with 64 investments worth C$23.2 billion one year prior.

Significant transactions last year included a C$1 billion co-investment for a 12 percent stake in The Ultimate Software Group alongside Hellman & Friedman and Blackstone. It also acquired a stake in global sports data analyst Sportradar alongside Technology Crossover Ventures at a €2.1 billion enterprise value.

The fund completed two co-investments – worth C$2 billion in total – with managers that were not in its private equity funds portfolio during the period. The funds group has relationships with 77 managers across 207 vehicles with $55 billion of total exposure, including uncalled commitments.

North American limited partners are hungry for co-investments. Teacher Retirement System of Texas expects to increase its private equity co-investments allocation to 35 percent and double the investment team to 30 professionals, PEI reported last month. Staff at the California Public Employees’ Retirement System are seeking board approval for a quick turnaround on co-investment decisions to help build out its private equity co-investment strategy.

CPPIB’s funds group also plans to build a new venture capital programme, the results said, although details were light.

“The private equity funds group will focus on building a new venture capital programme aligned with other CPPIB technology-related initiatives to support the fund’s growth. The group will continue to proactively develop GP relationships to gain better insight into upcoming fundraising activities,” the results said.

CPP joins Ontario Teachers’ Pension Plan, which last month launched a department for late-stage VC and growth equity investing.

CPPIB’s private equity portfolio was valued C$87.7 billion as of 31 March, compared with C$69.3 billion the previous year. The fund deployed C$20.1 billion into the asset class in the fiscal year and saw C$14.3 billion of dispositions. It made 16 commitments, three of which were not with existing managers.

Private equity returned 16.5 percent net last year, driven by an 18 percent return among foreign assets and 11.9 percent for emerging markets. The fund is ramping up its exposure to the latter as part of a 2025 strategic initiative, which aims to make emerging markets account for one-third of CPPIB assets. Emerging markets represented 19.9 percent of fund assets and 3.1 percent of private equity as of 31 March.

Secondaries group assets totalled C$8.6 billion, compared with C$5.8 billion the previous year. Private Equity International caught up with the fund’s secondaries team in late November.