Canada Pension Plan Investment Board invested almost a third more capital in secondaries transactions during the latest fiscal year than the previous one as it widened its scope.
The Toronto-headquartered pension’s secondaries unit invested C$5.5 billion ($4.1 billion; €3.7 billion) in deals in the 12 months to 31 March, according to its latest annual report. This is a 31 percent jump on the C$4.2 billion it invested in its previous fiscal year.
It has broadened the secondaries team’s focus into areas such as structured secondaries, Latin America, growth equity and venture capital, which will “support continued growth and diversification of the portfolio while allowing for the careful selection of attractive investment opportunities,” the report noted.
CPPIB’s secondaries group had C$8.6 billion in assets as of the end of March, up almost 50 percent year-on-year.
The secondaries team invested in 13 transactions including:
- four limited partner transactions including a portfolio in excess of $1.5 billion and three large and highly concentrated single manager/LP interest portfolios;
- a $290 million general partner commitment financing
- a $100 million GP-led fund restructuring
Secondaries Investor understands the large LP portfolio refers to CPPIB’s $1.7 billion transaction with Ontario Teachers’ Pension Plan at the end of last year.
In a November interview with Secondaries Investor, Nik Morandi, who helps lead the group’s European team, said having a flexible cost of capital allowed the group to apply the right cost of capital to transactions it likes.
“We look at the cashflows, we look at the risk associated with those cashflows and we price the deal accordingly. As a result, we can compete on equivalent terms to every other player out there,” he said.
North America accounted for the bulk of the group’s exposure at 69.5 percent, with Europe at 20.6 percent, Latin America at 5.5 percent and Asia at 4.4 percent.
The C$392 billion pension plans to maintain a large funds programme and will continue to use GP relationships to generate deals by focusing on relationship returns and portfolio construction, the report noted. The secondaries group will continue to grow and diversify its portfolio and will support “increased active management” of the private equity department’s mature private equity funds portfolio.