CPPIB's private equity portfolio soars 27%

The value of the Canadian institutional investor's private equity fund holdings rose by more than C$4bn over a six-month period.

The Canadian Pension Plan Investment Board valued its private equity portfolio at C$20.3 billion ($20.3 billion; €14.7bn) as of the end of September, a significant rise from the C$16 billion figure it reported six months ago.

The pension invests with more than 140 funds from 70 managers. Its direct private equity investments were valued at C$5.2 billion at the end of September, compared to C$4 billion at the end of the first quarter and C$3.1 billion in September 2009.

The C$138.7 billion pension valued its real estate portfolio, excluding debt, at C$9 billion as of the end of September – up from $7 billion six months earlier and C$6.9 billion one year earlier.

Real estate now accounts for 6.5 percent of CPPIB’s total fund, compared to 4.5 percent for infrastructure. CPPIB’s infrastructure portfolio was valued at C$6.2 billion as of the end of September, up from C$5.8 billion at the end of March. Those figures include roughly C$4.5 billion of direct infrastructure investments.

David Denison, CPPIB’s president and chief executive officer, said the Canadian pension would continue to acquire “long life assets such as infrastructure and core real estate” arguing it would give the plan “strong risk-adjusted returns … over many years”.

Earlier this month, CPPIB teamed up with LaSalle Investment Management to buy the regional mall, Hürth Park, in Hürth, Germany, from the open-ended fund Degi Europe for €157.3 million. That followed a deal in October to acquire 45 percent stakes in two prime office properties owned by Vornado Realty Trust for $91 million.

Denison told Reuters the pension’s 40-year investment horizon gave the fund a competitive advantage in a market where credit was sometimes still difficult to obtain.

“That requires people to put more equity into the capital structures of these real estate acquisitions and that still means that there is a lot of participants who can't do that … their business models doesn't allow them to do that,” he reportedly said.