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CPP Reports Increase in Net Assets from Strong Global Equity and Fixed Income

Canadian fund reported an increase in net assets in the previous quarter and a 10-year annualized net return of 9.3%

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  • Written by  Banking Exchange staff
 
 
CPP Reports Increase in Net Assets from Strong Global Equity and Fixed Income

Canada Pension Plan Investment Board (CPP Investments) has reported its net assets increased by $10.8 billion (C$14.6 billion) in the final three months of 2023.

The fund, which ended its third quarter of fiscal 2024 on December 31, 2023, increased net assets from $427.2 billion (C$576.1 billion) at the end of the previous quarter to $438.1 billion (C$590.8 billion).

It attributed these gains to its investments in public equity, fixed income, credit, private equity, energy, and infrastructure assets. Its international gains were partially offset by the impact of foreign exchange losses due to the Canadian dollar strengthening relative to the US dollar.

CPP Investments experienced $14.3 billion (C$19.3 billion) in inflows and $3.5 billion (C$4.7 billion) in outflows.

The fund, which includes the combination of the base CPP and additional CPP accounts, returned 3.4% over the quarter and a 10-year annualized net return of 9.3%.

John Graham, president and CEO, said:  “Strong performance of global equity and fixed income markets during the final months of calendar 2023 contributed to the fund’s continued growth. We remain focused on applying our investment capabilities to prudently manage the fund to deliver long-term value for CPP contributors and beneficiaries.”

Global private equity

The fund invested in a series of international private equity assets with a focus on Europe and Asia during the quarter, including allocating $429 million (€398 million) to acquire interests in three funds managed by Hayfin Capital Management. It said the transaction represented a diversified portfolio of European mid-market, single-company secondary investments, direct co-investments, and funds.

It also committed $175 million to MBK Partners Fund VI, which focuses on controlled buyout investments in South Korea, Japan, and Greater China, and $90 million to acquire ownership interests in a diversified portfolio of 25 private equity funds with investments distributed across Europe, North America, and Australia.

Also during the quarter, the fund agreed to a partial realization of its investment in Visma, in which it originally invested in 2019. The realization will leave CPP Investments with an approximate 2% stake in the company. The net proceeds from the sale are expected to be approximately $519 million (C$700 million).

CPP Investments also completed the sale of a diversified portfolio of 20 limited partnership fund interests during the quarter, which it said mostly consisted of North American and European buyout funds. The net proceeds from the sale were around $1.5 billion (C$2 billion).

Investments in 2024

Following the successful quarter, this year CPP Investments invested $50.4 million (£40 million) for a 1% stake in Dechra Pharmaceuticals alongside EQT. Dechra Pharmaceuticals is a UK-based developer and manufacturer of specialty animal pharmaceuticals.

The fund also made several US-based investments. It has committed to provide $75 million in financing to Global Lending Services (GLS), adding to its original loan of $75 million. GLS provides automotive financing solutions through franchise and independent automobile dealers.

It also signed an agreement to support the proposed merger between two California-based companies: Aera Energy, a major energy provider, and California Resources Corporation, an independent energy and carbon management company. CPP Investments will receive newly issued shares of common stock on close of the transaction, worth around 11.2% of the combined company.

The fund also invested $75 million in a secured credit facility issued by Altus Power, a commercial-scale provider of clean electric power that develops, owns, and operates locally sited solar generation, energy storage, and charging infrastructure in the US.

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