CPP Investments, the world’s largest investor in private equity according to affiliate title Private Equity International‘s GI 100, has backed a deal that allows Hermes GPE to continue managing a funds portfolio and one of the UK’s largest pensions to extract liquidity from its portfolio – the third such transaction the Canadian pension has executed with the pair.
The Toronto-headquartered pension fund led a deal worth C$1 billion ($805 million; €699 million), in which a strip of mid-market and growth assets from a BT Pension Scheme separately managed account managed by Hermes were moved into a continuation vehicle, according to details shared with Secondaries Investor by CPPIB and Hermes.
The SMA contained a global portfolio of mid-market and growth-focused fund and co-investment stakes with a weighted average vintage of 2017. Half of the SMA was transferred into the continuation vehicle, according to a spokeswoman for Hermes.
BTPS benefits from being able to “crystalise strong portfolio performance” while retaining a “significant” stake in the assets, according to the details.
Dushy Sivanithy, managing director and head of secondaries at the pension, said in an emailed statement to Secondaries Investor that the transaction demonstrates CPP Investments’ ability to act as a creative and collaborative partner in providing bespoke liquidity options for both LPs and GPs.
“We are actively seeking differentiated opportunities within the secondary market to add complementary exposure to our portfolio by leveraging our strong platform and deep industry relationships as a preferred counterparty,” he said.
CPPIB will also provide primary capital to Hermes as part of the transaction and will expand the scope of the Hermes strategies it backs.
A spokesman for the Canadian pension declined to comment on the size of the stapled commitment and on pricing.
A portion of up to 15 percent of the transaction will be syndicated to end-stage investors on the same price and terms, according to the details.
The transaction comes after the trio in 2018 completed a deal worth almost $1 billion in net asset value plus unfunded commitments that allowed Hermes, on behalf of BTPS, to move away from vanilla buyout vehicles and focus on high-growth funds and strategies including emerging markets and emerging managers.
Ardian joined as a minority co-investor in that deal, Secondaries Investor reported at the time.
The pandemic has caused limited partners to think carefully about the funds and managers they want to keep on their books, while recovering valuations and outperformance in portfolios have made opportunistic selling more attractive, as Secondaries Investor noted last week.
BT Pension Scheme had £57 billion ($76.8 billion; €66.7 billion) in net assets as of 30 June, according to its latest annual report.