Side Letter: CPPIB’s pandemic business tips, Nordic first close, Black interns

How CPPIB's Asia-Pacific head expects companies to behave during the pandemic. Plus: Nordic's remote fundraising smash, recruiting more Black interns, a potential break up of one of the world's largest pensions and more. Here's today's brief, for our valued subscribers only.

He said it

“This resolution says public pension funds should not be using investment managers as travel agents.”

Pennsylvania State Treasurer Joe Torsella at Pennsylvania Public School Employees’ Retirement System’s August board meeting; the pension approved a policy on staff travel following a local media report last year revealing some accommodations had been booked directly by Platinum Equity

Just happened

Canadian covid tips
With more than C$44 billion ($33.3 billion; €28 billion) of direct PE investments on its books and at its subsidiaries, Canada Pension Plan Investment Board is an investor that understands how businesses work. Speaking on a digital panel hosted by investment non-profit FCLT Global on Tuesday, CPPIB’s head of Asia-Pacific, Suyi Kim (pictured, bottom left), shared three tips for portfolio companies navigating the pandemic:

  1. Emerge stronger: Kim cited Starbucks’ decision to launch a customer reward system during the Global Financial Crisis as an example of how businesses can use the pandemic to emerge in a better position.
  2. Prepare for the worst: Businesses leaders must plan on the assumption that recovery could take longer than expected.
  3. Prioritise employees: Protecting staff can help companies ramp up more quickly after the pandemic and build loyalty. The C$434 billion fund has implemented several HR measures of its own, including “thoughtful” return to the office policies that account for childcare or home-schooling.

Read more from the panel session here.

Kim was joined on the webcast by GIC’s Chow Kiat Lim, IFM Investors’ David Neal and Lei Zhang, the founder and CEO of Hillhouse Capital Group.

Fundraising scoop

Nordic Capital surpassed its €5 billion target on the first close of its 10th flagship vehicle after less than five months in market (full story here). This will be the fund’s first since it received investment from Ottawa Avenue Private Capital, an investment firm linked to the DeVos family office. Nordic launched the vehicle at the beginning of global lockdown in March and has conducted a fully virtual fundraise. It has a hard-cap of €5.75 billion.


Black talent

More than 80 firms in the investment industry have signed up to the #100blackinterns programme, which seeks to offer 100 internships to Black students interested in a career in investment management. Private equity backers include CVC Capital PartnersCarlyle Group and LivingbridgeCanada Pension Plan Investment Board. The Church Commissioners for England has also signed up. Internships will be paid and last a minimum of six weeks over the summer of 2021. Programme participants will be placed in investment teams at PE firms, hedge funds, consultancies and pension funds. Find out more about #100blackinterns here.

FT warning

Despite the threat of thousands of job losses across the retail, hospitality and travel sectors, the UK government should not be looking for ways to bail out PE-backed companies, says the Financial Times in its editorial leader (paywall): “The industry has much to lose in the court of public opinion if it is seen to shirk its responsibilities in today’s crisis. Funds must show they are using all of their own resources to keep their businesses alive.”

Better off apart?

A recent parliamentary report has pushed for South Korea’s National Pension Service to be divided into multiple entities, Korean Investors reports. According to the report, splitting the fund would improve efficiency and encourage a more diverse investment strategy. At 749 trillion won ($627 billion; €527 billion), the NPS is the world’s third largest pension fund, but currently relies heavily on investments in local markets.

Get in your car(lyle)

Carlyle has asked employees to steer clear of public transport, as it tentatively prepares to reopen its London headquarters in September, reports the Financial Times (paywall). As part of its global policy, the firm has also requested that staff avoid returning to the office for 14 days if they use public transport over the weekend.

Dig deeper

Institution: Virginia Retirement System
Headquarters: Richmond, US
AUM: $76.9 billion
Allocation to alternatives: 28.8%

Virginia Retirement System approved $1.12 billion-worth of private equity commitments in July 2020, a contact at the pension informed Private Equity International.

The commitments comprised $300 million to Oaktree Opportunities Fund XI; $275 million to Prudential Capital Partners VI; €200 million to CVC Capital Partners VIII; $150 million to Thoma Bravo Fund XIV; $125 million to KKR Asian Fund IV; and $45 million to HIG Capital Partners VI.

For more information on Virginia Retirement System, as well as more than 5,900 other institutions, check out the PEI database.

Today’s letter was prepared by Toby Mitchenall with Philippa KentCarmela Mendoza and Alex Lynn.

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