CPPIB’s PE allocation tops 21%

Several private credit investments partly contributed to the increase, pushing private equity to 21.2% of the pension’s total assets.

Canada Pension Plan Investment Board’s actual allocation to private equity crossed the 21 percent mark in the third quarter of its 2017 fiscal year, ended 31 December.

Private equity assets stood at C$63.3 billion ($48.3 billion; €45.4 billion), representing 21.2 percent of total assets, up from C$63.1 billion, or 21 percent, in the previous quarter ended 30 September, according to a statement released on Friday.

Private investments disclosed by the board were heavily focused on private credit and included a $152.8 million investment in the first-lien loan of Pretium Packaging, a Missouri-based maker of plastic containers.

It also committed an additional $107.5 million in the first-lien term loan for Caliber Home Loans, a US-based mortgage originator and servicer owned by Lone Star, for a total commitment of $482 million.

Since the start of the calendar year – and the pension’s Q4 – some of the main private equity investments have included an C$80 million investment to acquire a 23 percent stake in Accordia Golf, a golf operator in Japan, which was made alongside MBK Partners.

CPPIB also agreed to acquire about 48 percent of California-based digital product development services company GlobalLogic Inc. from funds advised by Apax Partners. Apax funds will retain an equal stake in the company with CPPIB.

On the real asset side, the share of real estate assets went down, while infrastructure assets increased.

CPPIB had C$37.7 billion in real estate assets in the third quarter ended 31 December, or 12.6 percent of total assets, slightly down from C$38.4 billion, or 12.8 percent, the previous quarter. It had C$27.6 billion in infrastructure assets in the third quarter, or 9.3 percent, up from C$22.5 billion, or 7.5 percent, in the previous quarter.

There were several real estate transactions focused on China in the third quarter, including a $162 million investment to acquire a 40 percent interest in a shopping mall in Dalian and a $375 million commitment in CapitaLand’s Raffles City China Investment Partners III.

CPPIB also committed $375 million in Secured Capital Japan Real Estate Fund VI, PAG’s real estate investment vehicle focused on distressed debt and off-market acquisition opportunities primarily in Japan, as well as in South Korea and China.

Total CPPIB assets decreased to C$298.1 billion from C$300.5 billion during the quarter. The CPP fund returned a gross 7.1 percent in the third quarter.

“The fund’s modest return this quarter reflects the largest quarterly decline in North American fixed income markets since CPPIB’s inception coupled with the Canadian dollar strengthening against most major currencies except for the US dollar, partially offsetting gains in our public equity portfolio,” Mark Machin, CPPIB president and chief executive, said in the statement.