CPPIB’s PE portfolio inches up to C$61.3bn

The Canadian pension fund’s private equity portfolio had been steadily increasing, marking a 5% quarterly increase in its fiscal second quarter ended 30 September.

Canada Pension Plan Investment Board’s (CPPIB) private equity portfolio reached a new high during the second quarter – ended 30 September – of its 2017 fiscal year, having reached C$61.31 billion ($45.34 billion; €41.84 billion), according to its second-quarter financial statement.

This marked a 5 percent increase from C$58.31 billion in the first quarter ended 30 June, and a 14 percent jump from C$53.78 billion as of 30 September 2015, according to CPPIB’s quarterly financial reports.

The pension fund’s private equity portfolio is composed of C$3.65 billion in Canadian investments, C$52.64 billion in foreign developed market investments and C$5.02 billion in emerging markets, the latest financial report indicated.

CPPIB’s overall private equity portfolio represents 20.4 percent of its total net investment assets, which stood at C$300.51 billion at the end of its second quarter. This is roughly in line with its 20.3 percent allocation to private equity in the previous quarter, and represents a slight increase from 19.7 percent in the same quarter of the last fiscal year.

The pension fund’s target private equity allocation was not available.

According to CPPIB’s second-quarter financial statement, the fair value of its direct private equity investing portfolio stood at C$27.82 billion as of 30 June. This is about half, or 46 percent, of the total fair value for its private equity programme, which also includes fund investments that were valued at C$32.24 billion.

CPPIB is regarded as one of the major institutional investors in the private equity world that have transitioned toward a direct investing strategy in addition to committing to blind-pool private equity funds. It has been making direct investments for at least a decade.

During the fiscal second quarter, CPPIB agreed to acquire Ascot Underwriting Holdings and certain related entities for $1.1 billion. Other direct private investments included CPPIB’s Crestone Peak Resources acquiring Denver Julesberg Vasin oil and gas assets in Colorado from Encana Oil & Gas for $609 million.

CPPIB also announced a $500 million investment alongside TPG Capital to buy 17 percent stake in MISA Investments, the parent company of Viking Cruises. CPPIB and TPG are each contributing $250 million to the deal, according to a news release from CPPIB.

Although private equity-specific returns were not available, CPPIB’s overall portfolio delivered a net 4.75 percent internal rate of return for the quarter, according to a release for the second-quarter results. The portfolio delivered 10.5 percent and 5.6 percent net IRRs for the five-year and 10-year periods leading up to 30 September, respectively.

During the second quarter, CPPIB appointed Shane Feeney as senior managing director and global head of private investments, as reported by Private Equity International. Feeney’s previous position, head of direct private equity, was filled by Ryan Selwood, who had been a managing director at the pension fund.

A CPPIB spokeswoman was not available to comment.