CPP acquired secondhand stake in $8bn Sequoia fund

CPP Investments has acquired a stake in a Sequoia Capital fund and benefited from being an existing LP in the vehicle.

The Toronto-headquartered pension bought a roughly $180 million interest in the 2018-vintage Global Growth Fund III last year, it disclosed in its third quarter fiscal 2023 update. Secondaries Investor understands that the process was highly restricted by Sequoia to a small subset of existing LPs.

According to a source familiar with the transaction, the seller was keenly focused on buyers who knew the asset well and could transact quickly.

GGF III’s investments include crypto exchange FTX, which filed for bankruptcy last year amid investors pulling out capital and regulatory investigations.

Sequoia wrote its $150 million investment in FTX down to zero in November. In a letter to LPs that month, the firm noted that FTX was not a top 10 position in GGF III and accounted for less than 3 percent of the committed capital of the fund.

Secondaries Investor understands that CPP Investments’ purchase was initiated prior to the FTX collapse.

GGF III closed on $8 billion, according to PEI data. The fund delivered a 1.75x total value to paid in and a 31.84 percent net internal rate of return as of 30 June, according to data from Washington State Investment Board.

CPP Investments made an initial $295 million commitment to GGF III, according to PEI data. The secondaries acquisition would bring its total commitment exposure to at least $475 million, or almost 6 percent of the fund’s total size.

Other investments in GGF III are understood to be international B2C fast fashion e-commerce platform SHEIN and TikTok owner Bytedance.

A spokesperson for CPP Investments declined to provide details on the GGF III stake purchase beyond the Q3 update.

Fund stake trading accounted for 48 percent or $52.8 billion of the total $110 billion in secondaries market activity last year, according to research from PJT Park Hill.