38.05 F
London
November 22, 2024
PI Global Investments
Alternative Investments

CPP Investments grows assets to $646.8 billion in Q1 2025




CPP Investments grows assets to $646.8 billion in Q1 2025 | Benefits and Pensions Monitor















CPP Investments reports a $14.4bn asset increase in Q1 2025, supported by gains in diverse portfolios

CPP Investments grows assets to $646.8 billion in Q1 2025

Canada Pension Plan Investment Board (CPP Investments) has concluded the first quarter of fiscal 2025 on June 30, with net assets totalling $646.8bn, up from $632.3bn at the close of the previous quarter.

This $14.4bn increase was comprised of $6.3bn in net income and $8.1bn in net transfers from the Canada Pension Plan (CPP). 

The Fund, which includes both the base CPP and additional CPP accounts, recorded a 10-year annualized net return of 9.1 percent. The net return for the quarter was 1.0 percent. Since its establishment in 1999, CPP Investments has contributed $438.6bn in cumulative net income to the Fund. 

John Graham, president, and CEO, stated, “Our diversified portfolio is performing as designed with gains across most asset classes. We continue to prudently manage the Fund to deliver value to CPP contributors and beneficiaries over the very long term.” 

The quarter’s performance was primarily driven by public equity investments and private asset classes, especially in credit and US-dollar denominated assets, which benefitted from the strengthening US dollar against the Canadian dollar.

These gains were partially offset by government bonds, which faced challenges as global markets adjusted expectations for rate cuts by central banks due to ongoing inflation. 

Performance of Base and Additional CPP Accounts 

The base CPP account reported net assets of $603.6bn as of June 30, up from $593.8bn the previous quarter. This $9.8bn increase included $5.9bn in net income and $3.9bn in net transfers from the CPP.

The base CPP account achieved a net return of 1.0 percent for the quarter and a five-year annualized net return of 7.8 percent. 

The additional CPP account saw its net assets grow to $43.2bn by the end of the first quarter, up from $38.5bn in the prior quarter. This $4.6bn increase consisted of $0.4bn in net income and $4.2bn in net transfers from the CPP.

The additional CPP account recorded a net return of 0.9 percent for the quarter, with a five-year annualized net return of 4.7 percent. 

The additional CPP, designed with different legislative funding targets and contribution rates compared to the base CPP, has a distinct market risk target and investment profile. Consequently, its performance is expected to generally differ from that of the base CPP.

Due to its net contribution profile, the additional CPP account’s assets are expected to grow at a faster rate than those of the base CPP account. 

Long-Term Financial Sustainability 

The Office of the Chief Actuary of Canada evaluates the long-term financial sustainability of the CPP every three years.

The most recent triennial review, published in December 2022, confirmed that as of December 31, 2021, both the base and additional CPP remain sustainable over the long term at the legislated contribution rates. 

The Chief Actuary’s projections assume that over the 75 years following 2021, the base CPP account will earn an average annual rate of return of 3.69 percent above the rate of Canadian consumer price inflation.

The corresponding assumption for the additional CPP account is an average annual real rate of return of 3.27 percent. 

CPP Investments continues to build a portfolio aimed at maximizing the rate of return without undue risk of loss while considering factors that could impact CPP funding and its ability to pay benefits as they come due.

The CPP is designed to serve current contributors and beneficiaries while also planning for future decades and multiple generations, making long-term results a more appropriate measure of CPP Investments’ performance and plan sustainability. 

Operational Highlights 

Executive Announcements 

Priti Singh has been appointed senior managing director and chief risk officer (CRO), responsible for global risk management functions, including integrating risk perspectives into all investment and operational processes.

Singh previously served as senior managing director and global head of Capital Markets and Factor Investing. 

Heather Tobin has been promoted to senior managing director and global head of Capital Markets and Factor Investing, where she will lead the External Portfolio Management, Systematic Strategies, Investment Engineering and Analytics, and Strategy, Risk and Operations groups.

She joins the executive team after serving as managing director, head of Investment Portfolio Management in the Office of the chief investment officer. 

Caitlin Gubbels will assume the role of senior managing director and global head of Private Equity, effective October 15. She will lead the global Private Equity program, including teams dedicated to Direct Private Equity, Private Equity Asia, and Private Equity Funds and Secondaries.

Gubbels was most recently managing director, head of Funds and will join the executive team. 

Suyi Kim, after 17 years with CPP Investments, will pursue new global investment leadership opportunities outside the organization.

Kim opened the Asia Pacific regional office in Hong Kong in 2008, establishing it as a key hub for the global investment strategy, and most recently led the global Private Equity business out of Toronto and New York. Kim will remain with the organization until November to ensure a smooth transition. 

Kristen Walters, after more than three decades in risk management, will be leaving CPP Investments to be closer to home. Walters has significantly contributed to establishing the CRO role as a standalone function and setting the enterprise risk strategy. 

Corporate Developments 

CPP Investments hosted its first two in-person public meetings for fiscal 2025 in April, offering CPP contributors and beneficiaries an opportunity to engage with senior leaders.

Additional meetings, including a national virtual meeting, are scheduled for the fall, reflecting ongoing accountability to the CPP’s over 22 million contributors and beneficiaries. Public meetings are held every two years across Canada. 

First-Quarter Investment Highlights 

Active Equities 

CPP Investments realized a partial interest of its stake in Viking Holdings for net proceeds of $714m through the company’s initial public offering. Viking Holdings is a global cruise operator and travel company. The initial investment was made in 2016, and CPP Investments continues to hold a 15 percent stake. 

Credit Investments 

CPP Investments invested approximately €200m in mezzanine financing to support Sosteneo’s acquisition of a 49 percent interest in Enel Libra Flexsys S.r.l., which operates a portfolio of battery energy storage system projects and open-cycle gas turbine projects in Italy, with a total capacity of 2.6 gigawatts. 

US$250m was invested in a loan facility to support the merger of two Indian pharmaceutical contract development and manufacturing organizations, Cohance Lifesciences and Suven Pharma, owned by Advent International. 

CPP Investments invested US$100m in a mezzanine loan secured against The Diplomat Beach Resort, a luxury resort in Fort Lauderdale, Florida, and another US$100m in a mezzanine loan secured against 640 Fifth Avenue, a mixed-use property in Manhattan, New York City. 

An existing relationship with Affirm was expanded, providing a committed capacity of up to US$1.4bn in outstanding loan portfolio balance. Affirm is a US payments provider, originating unsecured loans for consumers to pay overtime without late or hidden fees. 

CPP Investments committed US$250m in a loan facility to support CoreWeave, Inc.’s purchase of contracted Nvidia Graphics Processing Units (GPU) servers for cloud computing.

CoreWeave, based in the US, provides cloud infrastructure at scale to support AI and machine learning workstreams and is one of the largest purchasers of Nvidia GPUs. 

$185m was invested in an Indian Rupee-denominated loan facility to Enfinity Global to build 1.2 gigawatts of solar and wind power plants in India. Enfinity Global, based in the US, is a renewable energy and sustainable services company with a portfolio of solar, onshore wind, and battery storage assets. 

The sale of Amitra Capital Limited to Arrow Global Group Limited was completed. Amitra Capital specializes in managing European non-performing loans and real estate investments.

CPP Investments retains a majority direct economic interest in all portfolios managed by Amitra Capital and subsequently committed an additional €300m to refinance existing loan facilities. 

US$100m was invested in the preferred equity of Excelitas, a US-based photonics technology company specializing in sensing, detection, imaging, and illumination solutions. 

US$353m was invested in an amend-and-extend of a senior secured term loan for Straive, a business process outsourcing company focused on education, data, and publishing verticals, with operations primarily in India and the Philippines. 

Private Equity 

US$200m was committed to Clearlake Capital Partners VIII, L.P., which will deploy capital across private equity, credit, and related strategies primarily in North America. 

US$600m was committed to Thoma Bravo XVI, L.P., targeting control-oriented software buyouts in the application, infrastructure, and cybersecurity sub-sectors within North America and Europe. 

US$100m was committed to Brookfield Capital Partners VI, which will make control investments in industrials, business services, and infrastructure services companies globally. 

Approximately €77m was committed to Barley (No. 1) Limited Partnership, a single asset continuation vehicle for a European specialty ingredients distributor. 

US$86m was invested alongside Silver Lake in Vantage Data Centers (Vantage), a US-based provider of data centre campuses for cloud providers and large enterprises globally. 

US$110m was invested for a minority stake in Adevinta, an online classifieds platform in Europe, alongside Blackstone and Permira. 

US$100m was invested for a 14 percent stake in The Rawlings Group, a US-based provider of cost containment services for health insurance clients, alongside New Mountain Capital. 

US$220m was invested to acquire interests in two funds and two healthcare co-investments managed by Avista Capital Partners, which focuses on high-growth middle-market product and technology healthcare companies in North America and Europe. 

US$450m was committed to Ontic, a UK-based provider of specialized parts and repair services for established aerospace technologies. 

US$50m was committed to Scale AI, a US-based platform that accelerates the creation of high-quality training data for AI models by combining advanced machine learning algorithms with human intelligence. 

US$100m was committed to Kedaara Capital Fund IV, focusing on mid-market buyout and minority growth investments in India. 

CPP Investments agreed to sell its ownership stake in Dorna Sports, a global sports management, media, and marketing company holding the global rights to organize the MotoGP and WSBK Championships.

Net proceeds from the transaction are expected to be approximately $1.9bn, with 75 percent in cash and 25 percent in Series C Liberty Formula One tracking stock. The initial investment was made in 2013. 

Real Assets 

€500m was committed to Blackstone Real Estate Partners Europe VII, investing in under-managed, well-located real estate assets across Europe. 

CPP Investments entered into an agreement to jointly acquire ALLETE, Inc. alongside Global Infrastructure Partners for US$6.2bn, including debt assumption.

ALLETE, based in Duluth, Minnesota, is focused on clean-energy transition by expanding renewables, reducing carbon, enhancing grid resiliency, and driving innovation. Upon closing, CPP Investments will hold a 40 percent ownership stake in ALLETE. 

A follow-on equity investment commitment of up to US$300m was announced for Encino Acquisition Partners, a Houston-based oil and gas company with a focus on sustainability, to support the development of the Utica oil play. CPP Investments has been invested in the company since 2018. 

Transaction Highlights Following the Quarter 

CPP Investments sold its stake in One Paramount 1, a Grade A office development in Chennai, India, with net proceeds of US$52m. The initial investment was made in 2021 in a joint venture with RMZ Corp in India to hold and develop commercial real estate assets. 

CPP Investments committed to invest up to £75m in a mezzanine loan facility supporting ThinCats, an alternative lender to mid-sized businesses in the UK. 

US$75m was invested alongside Kainos in Gehl Foods, a US-based developer and manufacturer of shelf-stable protein drinks, plant-based milks, soups, cheese sauces, and chili for blue-chip brands, retailers, and foodservice customers across North America. 

US$75m was committed to Radical Growth I, managed by Radical Ventures, an AI-focused venture and growth manager with offices in Toronto, San Francisco, and London. The total commitment now stands at US$204m across various fundraising cycles since the initial investment in 2019. 

CPP Investments exited its approximate 6 percent stake in Delhivery, India’s largest integrated third-party logistics service provider, with net proceeds of $298m. The initial investment in the company was made in 2019. 

Approximately €550m was committed to acquire a 20 percent stake in team.blue, a web hosting services provider and digital enabler for entrepreneurs and small and medium-sized businesses across Europe.




Source link

Related posts

What drives investors to seek alternative strategies amid market volatility?

D.William

How the wealthy are investing for growth

D.William

Alternative Investment Exchange (AIX) Enters Partnership with Virtus Real Estate Capital

D.William

Leave a Comment

* By using this form you agree with the storage and handling of your data by this website.