Private equity values hold steady at CPPIB

The $116bn Canadian pension's private equity portfolio has recorded a slight uptick in valuations since June.

Buoyed by recovering public equity markets, the Canada Pension Plan Investment Board (CPPIB) posted a C$7.2 billion (€4.6 billion; $6.9 billion) gain in the value of its investment fund since 30 June, now worth C$123.8 billion.

The Canadian pension’s private equity and real estate assets experienced little change in holding value; its private equity investments were valued at C$13.9 billion as of 30 September, up 0.5 percent from their June levels, while real estate values dropped 0.5 percent to C$7.5 billion.

Overall, private equity now represents 11.2 percent of the board’s portfolio value, while private real estate represents about 6 percent.

Infrastructure was also a major contributor to the invesment portfolio's rise: Of the C$7.2 billion increase in value since June, C$1.3 billion, or about 18 percent, came from CPPIB’s infrastructure portfolio, now valued at C$5.9 billion. A CPPIB spokeswoman said the infrastructure figures were boosted by the board’s C$2.1 billion buyout of the Macquarie Communications Infrastructure Group, which closed last quarter.

While the overall C$7.2 billion portfolio gain is signficant, it is just a small step toward the pension’s overall growth targets for the next seven years. “At the total fund level, we’re expecting that C$120 billion dollars to actually double in size in the next five to seven years,” Mark Wiseman, head of the board’s private investments division, which manages infrastructure and private equity, said at the PEI Infrastructure Investor Forum in New York in September.

Wiseman said the value would double “years both because [of] investment returns but also because the fund has net cash inflows from working Canadians. We also expect the portion of the portfolio that’s invested in infrastructure to grow.”

CPPIB, which primarily invests its money through in-house investment professionals, has about 100 people in its private investments division. The pension also has a separate real estate investment team headed by Wenzel Hoberg.

CPPIB, which began investing 10 years ago, is an independent asset manager that invests the funds that the Canada Pension Plan, the country’s national pension system, does not need to pay out for its current benefits.

Since it began investing, it has generated C$37.2 billion in investment income, an annualised investment return rate of 5.2 percent, according to a statement.