Paul venture takes CPP commitment to $6bn

The Canada Pension Plan Investment Board has announced a new $120m co-investment agreement with Paul Capital Partners to acquire secondary private equity fund interests in the US.

The Canada Pension Plan Investment Board (CPPIB), the financial manager of funds not required by the Canada Pension Plan to pay current pensions, has backed the acquisition of a portfolio of secondary private equity fund interests alongside Paul Capital Partners, the US secondary specialist.

The CPP Investment Board has agreed to commit $120 million (€95 million) to CPP Investment Board-Paul Capital Holdings II, the $310-million limited partnership that will acquire the secondary portfolio. The portfolio, which will be managed by Paul Capital Partners, consists of a diversified portfolio of private equity partnership interests, primarily consisting of US buyout funds, although as is typical with such transactions, further details were not disclosed.


“This transaction continues our strategy of leveraging our internal capabilities with our external partners,” said John MacNaughton, president and CEO of the CPP Investment Board. “We continue to take advantage of an active secondary market to provide us with earlier distributions, attractive returns and enhanced diversification.”


This commitment brings the CPP Investment Board's private equity commitment to a total of $6 billion committed to 42 limited partnerships managed by 36 private equity firms. Commitments to secondary portfolios currently make up approximately 17.5 percent of the CPP Investment Board's private equity portfolio.


The total Canada Pension Plan portfolio, which includes contributions to the Canada Pension Plan net of benefits paid, is $64.4 billion. The CPP Investment Board plans to invest up to 10 percent of the total portfolio in private equity.


The secondary agreement is the latest in a series between Paul Capital and CPPIB. In 2002, CPPIB announced a commitment of up to $100 million over six years to a Paul Capital fund of funds focused on investing in North American venture capital funds. In September 2001, it agreed a $135 million commitment over four years to Paul Capital Partners VII, a $1.2 billion fund to acquire US and European limited partnership interests in the secondary markets.


At the end of 2003, Toronto-based CPP Investment Board announced that Mark Weisdorf, head of the firm’s private equity investment group, had resigned his post as vice president of private market investments to “pursue other interests.” The CPP Investment Board has yet to announce his successor.