August 21, 2001
The CPP Investment Board announced today its first commitments to private equity markets, totalling $217 million, or approximately 2 percent of the $11 billion in assets reported on June 30, 2001.
In June, the CPP Investment Board announced that it would ultimately invest up to 10 percent of its assets in private markets. The process involves commitments to external managers who draw down the funds over four or five years as suitable investments are identified.
The first two investments are:
• $67 million to Clairvest Group Inc., a Canadian merchant bank that trades on the Toronto Stock Exchange (TSE: CVG). The investment consists of a $50 million commitment over five years to the company’s buyout fund, Clairvest Equity Partners Limited Partnership. Other investors include Canadian pension funds and insurance and investment companies. The CPP Investment Board also purchased a 10 percent ownership position in the merchant bank. Specifically, it acquired 100 percent of a new class of non-voting equity shares issued by Clairvest Group Inc. The CPP Investment Board purchased 2,230,954 shares at $7.56 each for an aggregate of $16,866,000 by way of private placement. The shares were purchased for investment purposes.
• A $150 million commitment over five years to GM Capital Partners I, L.P., sponsored by GM Investment Management Company, which manages more than $175 billion for the GM Pension Trust and other pension funds. Three other large pension funds are also investors. The fund makes direct investments in buyout and venture capital opportunities, principally in the United States.
The CPP Investment Board currently invests in publicly traded equities, with approximately 70 percent in funds based on the TSE 300 Index and 30 percent in U.S. and international index funds. Private market investments are expected to produce higher returns than public equities over the long term.
The CPP Investment Board is a crown corporation created by an Act of Parliament in December 1997. It invests funds not needed by the Canada Pension Plan to pay current pensions. Cash flows are currently invested only in equities to balance the bond portfolio owned by the Canada Pension Plan. By increasing the long-term value of funds, the CPP Investment Board will help the Plan to keep its pension promise to Canadians. The CPP Investment Board is governed and managed independently of the Canada Pension Plan and at arm’s length from governments.
For further information contact:
Vice President – Private Market Investments