CPPIB PE returns soar in 2017 fiscal year

Private equity performance for Canada's largest pension, which had C$59bn in the asset class at 31 March, was boosted by higher returns in the domestic and foreign developed market segments.

Canada Pension Plan Investment Board achieved year-on-year gains in its net annual private equity investment returns for the 2017 fiscal year ended 31 March.

The Toronto-based pension, which had 18.5 percent of its C$316.7 billion ($234.5 billion; €208.8 billion) net assets in private equity as of 31 March, generated an average of 13.3 percent net returns across its three private equity portfolios: Canadian, foreign and emerging markets.

This marks an increase from an average of 9.9 percent net returns produced across these portfolios in the 2016 fiscal year ended 31 March 2016, according to its 2017 annual report released last week.

CPPIB’s Canadian private equity portfolio returned net 8.6 percent in its fiscal 2017, more than double the 4 percent in the prior year and foreign private equity posted a 15.8 percent net return, up from the 8.8 percent in 2016.

Although performance of its emerging markets private equity portfolio marked a 15.4 percent net return, lagging the 17 percent net return from 2016, the sharp increase in the other two areas for the 2017 helped bring up the average performance across all three private equity segments.

CPPIB’s total private equity assets also increased, growing 12.7 percent to C$58.6 billion at 31 March from C$52 billion at the end of its 2016 fiscal year, the annual report showed. The C$58.6 billion consisted of C$38.7 billion – or about two-thirds – in fund commitments and C$19.9 billion in direct investments. CPPIB initially launched its private equity investment programme in 2001, when it began with just fund commitments.

The increase in private equity assets in 2017 was boosted by transactions including the acquisition of an approximately 48 percent stake in digital customer service product developer GlobalLogic from Apax Partners in January. In March, Secondaries Investor reported that CPPIB was set to acquire Ardian’s 2006-vintage private equity fund stakes in a secondaries transaction, though the deal had not been signed as of 28 March.

CPPIB has also been expanding its Asia-Pacific secondaries capability. The firm has hired two staff in Hong Kong to focus on the strategy since August and has since signed two deals, as Secondaries Investor reported in mid-May.

Across the overall portfolio, it was a fruitful year for CPPIB, which posted net returns of 11.8 percent across all assets at 31 March, up from 3.4 percent at 31 March 2016.