Canada Pension Plan Investment Board‘s secondaries team invested C$4.2 billion ($3.3 billion; €2.8 billion) last year, resulting in the unit’s most active year since it was founded in 2007.
The pension giant closed 14 deals, including the restructuring of funds managed by Peruvian private equity firm Enfoca Inversiones in which it invested $380 million, according to its latest annual report, published on Thursday.
Its activity last year also included buying two large limited partnership portfolios and completing its first two preferred equity deals, one of which involved its Asian private equity team, the report noted.
CPPIB emerged as the backer of a stapled deal involving Olympus Capital Asia‘s 2007-vintage fund and latest vehicle, providing as much as $200 million in preferred equity to Olympus Capital Asia III fund as well as committing $30 million to Olympus Capital Asia V, as Secondaries Investor reported in September.
The pension highlighted record-high levels of dry powder for direct investments as a concern, and noted this also affects its secondaries business.
“Capital washing through the markets also challenges our secondaries business, as returns from buying illiquid fund stakes in the secondary market shrink as discounts vanish,” it noted.
The pension’s secondaries and co-investments portfolio grew to C$10 billion in carrying value, up 56 percent from C$6.4 billion the prior year, according to the report. Secondaries were the largest component of this portfolio and both LP secondaries and direct secondaries were “significant contributors” to the portfolio’s investment gains.
The secondaries and co-investment unit invested C$5.8 billion, up more than threefold compared with 2016.
The pension also said that proactive sourcing of access to attractive fund managers, secondaries deals and co-investments is a “key focus” this year.
CPPIB has secondaries professionals based in its London, Toronto and Hong Kong offices. Its London team is led by Nik Morandi and Louis Choy. Choy ranked first in Secondaries Investor‘s Young Guns of Secondaries Class of 2017.
Non-traditional buyers such as public or private pension plans and sovereign wealth funds backed 10 percent of the $54 billion in deal volume last year, according to Evercore’s 2017 Secondary Market Survey Results.