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CPPIB’s PE assets grow by $1bn

Private equity accounted for 18% of the pension’s C$326.5bn assets as of 30 June.

Canadian Pension Plan Investment Board’s private equity assets climbed by C$1 billion ($786.7 million; €666.8 million) during the first quarter of its 2018 fiscal year, according to its Q1 results.

The pension’s private equity holdings grew from C$58.6 billion at 31 March to C$59.7 billion in its Q1, which runs from 31 March to 30 June. This was partly driven by a C$1.1 billion rise in foreign investments to C$52.7 billion. Emerging markets and Canadian private equity investments stood at C$5.8 billion and C$1.2 billion at 30 June respectively.

Key private equity deals for the quarter included a co-investment with Baring Private Equity Asia to privatise Nord Anglia Education for $4.3 billion. The fund also committed equity with Encino Energy to form gas asset specialist Encino Acquisition Partners. CPPIB has committed up to $1 billion to EAP in total, the results noted.

An income boost to the pension’s overall assets saw the actual private equity allocation drop from 18.5 percent of the portfolio to 18.3 percent during Q1. The dip followed a C$5.7 billion rise in net income after all CPPIB costs and C$4.1 billion in net Canada Pension Plan contributions during the first quarter, with net assets climbing to C$326.5 billion, according to the results.

“Global equity markets produced a significant uplift and gains from fixed income improved,” Mark Machin, president and chief executive of CPPIB, said in a statement. “Meanwhile, the strengthening Canadian dollar against most major currencies applied downward pressure, a trend that accelerated in the first half of the current quarter.”

The portfolio achieved an overall 10-year and five-year annualised nominal returns of 6.9 percent and 12.1 percent, respectively, but the results did not give specific returns information for private equity. CPPIB posted a 1.9 percent gross investment return for the quarter.

CPPIB promoted former managing director, head of portfolio construction and research Geoffrey Rubin to senior managing director and chief investment strategist after the reporting period. Meanwhile, Neil Beaumont joined as senior managing director, chief financial officer and risk officer.

Earlier this year, CPPIB’s head of private equity for Asia said it and other pension funds have contributed to the problem of too much dry powder in the region. “It's funds like us that is part of the problem as well as all of the domestic Chinese private equity money,” Deborah Orida, managing director, said, at the FT Investment Management Summit Asia 2017 in Hong Kong in June.