Side Letter: CPPIB’s back; EQT’s GP acquisition; Eurazeo, Tikehau earnings

Details of CPPIB's latest deals with BT Pension Scheme and Goldman Sachs. Plus: Titbits from EQT's second GP acquisition and highlights from Eurazeo's and Tikehau's Q3 earnings. Here's today's brief, for our valued subscribers only.

They said it

“If the internet doesn’t kill us, it is certainly going to create productivity advances”

Paul Matson, chief executive of the $49 billion Arizona State Retirement System, said at Monday’s investment committee meeting that long-term demographic and productivity trends will hold down long-term inflation.

Just happened

Liquid(ity) gold
Canada Pension Plan Investment Board is the biggest investor in private equity for a reason: it’s a staunch supporter of the asset class via both directs and fund investments. On the secondaries side it has been a little quiet of late – until now. Side Letter can reveal that the C$519.6 billion ($418 billion; €362 billion) pension has backed two sizeable deals, one with Goldman Sachs and the other with the UK’s second-largest retirement fund. On the latter, CPP Investments led a C$1 billion process that involved acquiring exposure to a BT Pension Scheme separately managed account comprising fund stakes and co-investments managed by Hermes GPE. The deal was structured as a strip sale in which a slice of exposure was moved into a continuation vehicle. It’s the third time the Canadian investor has backed such a process with BTPS and Hermes, and gives liquidity to the UK pension while allowing it to retain exposure to the assets. As part of the deal, CPPIB is giving Hermes primary capital to manage (it’s unclear how much) – an edge that’s always been a draw card for the Canadian investor. More to come from our colleagues at Secondaries Investor (subscription required) later today.

EQT’s latest capital injection
EQT has acquired European life sciences investment firm LSP, according to a statement earlier today. Here are some key takeaways:

  • The transaction amounted to €450 million upfront, comprising 25 percent cash and 75 percent new EQT AB publicly traded shares, with a potential additional earn-out payment of €25 million.
  • EQT will acquire 100 percent of the LSP management company and 20 percent of the right to carried interest in select LSP funds. It will also be entitled to 35 percent of the carried interest of future funds.
  • Amsterdam-headquartered LSP has €3 billion of assets under management and has backed more than 150 companies since 1998.
  • It manages several fund families, including its early-to-late-stage drug development and medical tech-focused flagships; a late-stage medical tech fund; and a dementia-focused fund.
  • This is EQT’s second GP acquisition since its IPO, following the purchase of real estate firm Exeter earlier this year.

Essentials

Les résultats
Third-quarter results are out for French asset managers Eurazeo and Tikehau Capital. Here are some highlights:

Eurazeo

  • Its private equity AUM has grown 32 percent in the last nine months to €19.9 billion, or 76 percent of its total AUM.
  • Eurazeo raised €3 billion of new capital from January to September across its growth, secondaries and private debt vehicles, as well as for a newly launched small- and mid-market buyout fund.
  • This figure is nearly double what it raised over the same period last year and is expected to exceed €4 billion by year-end.
  • It deployed €4.1 billion over the first three quarters, compared with €1.7 billion for the same period last year.
  • Realisations across healthcare, tech, financial services and the energy transition more than tripled to €2.4 billion, from €700 million.
  • The firm doubled down on its investment in Planet, raising more than €500 million from LPs for a continuation fund in October. Eurazeo had sold its majority stake in the Irish fintech company to Advent International and re-invested alongside the firm earlier in the year.

Tikehau

  • AUM grew 17 percent year-on-year to €31.8 billion as of the end of September, with PE assets climbing 34 percent to €4 billion.
  • Tikehau raised €3.8 billion of fresh capital across all strategies in the first nine months of the year, of which €1.4 billion was gathered in Q3 alone.
  • The firm invested €3.7 billion from January to September, up from €1.2 billion over the same period last year.

Shooting for the Moon
Last week, fundraising platform Moonfare secured funding from one of the world’s premier tech investors. Insight Partners led a $125 million funding round for the Berlin-based business, which gives investors access to PE funds for a minimum investment of just $60,000. EQTCarlyle Group and Warburg Pincus are among those represented on the platform, which offers access to at least 42 individual funds.

It is difficult to put a figure on the potential represented by individual investors, which is undoubtedly large. According to data from Morgan Stanley, high-net-worth individuals are on track to account for an additional $1.5 trillion of PE assets under management by 2025. The support of Insight, which is seeking $12 billion for its 12th flagship fund, is a vindication of Moonfare’s approach and throws further weight behind the push towards non-institutional investors.


Today’s letter was prepared by Alex Lynn with Adam LeRod JamesCarmela Mendoza and Michael Baruch