CPPIB grows private equity and debt holdings

The Canadian pension increased the size of its private equity portfolio for the 13th time in the past 14 quarters and now has about 17% of its $173bn total assets invested in private equity.

The Canada Pension Plan Investment Board grew its private equity portfolio by roughly 5.3 percent during the fourth quarter of 2012, a period in which the pension plan also completed several large debt investments.

The value of CPPIB’s private equity investments rose by C$1.5 billion (€1.1 billion; $1.5 billion) to C$29.6 billion during the three month period ending 31 December, comprising about 17 percent of the pension’s $172.6 billion total assets. The pension plan’s private equity portfolio has increased in size in 13 of the past 14 quarters, with its only decrease coming in Q4 2011.

During the fourth quarter of 2012, CPPIB completed the $6.6 billion acquisition of US cable company Suddenlink and the $1.1 billion purchase of the Air Distribution division of UK engineering company Tomkins.

The pension plan’s private debt group CPPIB Credit Investments also completed several transactions totaling about C$1 billion during the same period. The group invested C$400 million in a high-yield loan to CVC-backed Formula One Group, bought C$200 million of senior debt in Calgary-based Legacy Oil & Gas and purchased C$105 million of senior debt in North American gas and electricity marketing company Just Energy Group.

CPPIB’s overall investment portfolio generated C$5 billion of income during Q4, helping grow its total assets by 1.4 percent.

“We continued to see solid returns this quarter due to strong increases in global public equity markets and income generated by the portfolio’s private assets,” CPPIB president and chief executive officer Mark Wiseman said in a statement.

Last month, CPPIB joined forces with Kohlberg Kravis Roberts and Greenwich-based Stone Point Capital to tap into the mid-market private debt space. CPPIB Credit Investments committed $50 million to MerchCap Solutions, a $300 million joint venture which KKR and Stone Point set up in August last year. The vehicle, formerly known as KKR-SPC Merchant Advisors, was set up to fill the gap that was left by banks that have reduced their lending activity.

Stone Point committed $150 million from its Trident V Fund while KKR committed $150 million from its balance sheet, Private Equity International reported at the time.

In addition, CPPIB has earmarked up to $2 billion for direct investments in mid-market debt and other corporate lending activities for clients of MerchCap Solutions, according to a statement.