Side Letter: CPPIB’s savvy sales, LPs feeling liquid, Sustainable sub lines

Luck or judgment? Either way, CPPIB has made itself look smart with the timing of some big PE portfolio sales. Plus: sustainable credit facilities and more intel on LP liquidity. Here’s today's brief, for our valued subscribers only.

She said it

“Overnight it was ‘I don’t want your seed portfolio, it can’t possibly be worth what it was when you purchased it, and why would I buy into a pool of existing assets?'”

Christy Gahr, principal and real estate consultant at Meketa Group, tells sister title PERE that a seed portfolio has become a liability for many firms in fundraising mode.

Just happened

Still the smartest folks in the room

PEI’s Adam Le (left) interviews CPPIB’s secondaries team in 2019. Source: Peter Searle

It’s impossible to time the market… unless you’re Canada Pension Plan Investment Board, it seems. The giant pension sold off C$2.5 billion ($1.8 billion; €1.7 billion) in net asset value of private equity exposure in the year to end-March, it revealed in its annual report this week. Now, there’s no way CPPIB could have predicted a pandemic, but insiders say the pension sensed the top of the market in the second half of last year and decided it was time to de-risk. Side Letter understands some of the fund stakes it sold were more unfunded positions, which means at a time when much M&A activity is on pause, the pension has swapped blindpool risk for money in the bag.

Readers keen to know more about these smart Canucks should revisit our profile of CPPIB’s secondaries team here.

Sub lines for sustainable development

Standard Chartered has closed an €80 million subscription finance facility with “one of the world’s largest private markets investment managers” for investments that align with the UN’s Sustainable Development Goals, its first of this kind, it said yesterday. It is keeping mum on who the manager is. StanChart is following in the footsteps of Dutch bank ING, which closed a $65 million three-year revolving facility linked to sustainability criteria with Quadria Capital in October. In January European investor Eurazeo secured a €1.5 billion credit facility “indexed against ESG performance criteria”.

LP liquidity update

An investor survey from Eaton Partners should calm jitters over investor liquidity amid the covid-19 crisis. Based on responses from 71 limited partners surveyed in mid-May:

  • 51 percent are making no change to their private markets allocations for 2020, the rest are split pretty evenly between cutting and increasing theirs;
  • 55 percent are unconcerned about the denominator effect at the moment, with 31 percent “somewhat concerned”;
  • Most have seen the pace of capital calls from GPs remain unchanged (51 percent) over the past month; 28 percent have seen a rise, 21 percent a decrease;
  • “Are LPs facing liquidity issues?” 56 percent said “no”, 44 percent said “yes”.

See the results in full here.

They did the math

Be prepared. Findings from Eaton Partners’ latest LP Pulse Survey show one in 10 LPs are increasing their focus on climate change and future pandemic risk in their due diligence.


Avoiding clawback risk. Returning carry under clawback can be complex, but timing and available cash reserves can make a big difference. Larger,  well-capitalised firms have an advantage too, but that all depends on who’s on the hook in the governing documents. Read more here.

Dig deeper

Fund name: MBK Partners V
Amount raised: $6.5 billion
Target size: $6.5 billion
Stage of fundraising: Final close
Final close date: May 2020
Time on the road: Seven months

MBK Partners has held a final close on MBK Partners V on its $6.5 billion hard-cap. The buyout vehicle will target the consumer and retail, financial services and telecommunications and media sectors across China, South Korea and Japan.

For more details on MBK Partners V and more than 5,900 institutions, check out the PEI database.

We would love your feedback to help us make this newsletter more useful; click here to give us your opinion.

Today’s letter was prepared by Toby MitchenallIsobel Markham, Adam Le and Carmela Mendoza.

Subscribe now and get Side Letter delivered to your inbox each day

To find out how, email, or call our team:

London: +44 207 566 5432
New York: +1 646 545 6296
Hong Kong: +852 2153 3140