December 10, 2001
The CPP Investment Board announced today a commitment of $150 million over five years to a new private equity fund that will invest in Canadian companies requiring financial or operating restructuring and up to US$150 million of commitments and co-investments over six years to an American fund and its portfolio of industrial companies.
The new Canadian fund, Tricap Restructuring Fund, is managed by Trilon Financial Corporation, in which Brascan Corporation is the major shareholder. Trilon is the largest individual investor in Tricap. Other investors include the Canadian Imperial Bank of Commerce and TD Capital.
“The Tricap management team has an impressive 20-year track record of working with Canadian companies in the real estate, energy, manufacturing and natural resource sectors,” commented Mark Weisdorf, the vice president responsible for private market investments at the CPP Investment Board. Mr. Weisdorf added that Tricap is the only private equity fund in Canada strictly focused on restructuring and turnaround opportunities. “This is an area where the funds we receive from the Canada Pension Plan can generate investment income that will eventually help to pay future pension benefits, and at the same time work in the best interests of a stronger Canadian economy.” Tricap will acquire securities of underperforming companies requiring financial restructuring, strategic redirection, management changes or operational improvement. The U.S. commitment is to Heartland Industrial Partners, a newly established firm founded by a team of managers with extensive merchant banking and private equity experience. The firm will consolidate industrial acquisitions in the auto parts and other manufacturing sectors to create more profitable growth enterprises. ”We like the quality of the team that has come together to manage what will eventually be a US$1.5 billion buyout fund,” Mr. Weisdorf commented. “This is an opportunity for us to get involved at the ground floor in a new private equity pool that should produce superior long-term returns.”
In June, the CPP Investment Board announced it would ultimately invest up to 10 percent of assets in private equity. To date, approximately $1.1 billion has been committed to private market investments. Commitments are made to external managers who draw down the funds over four or five years as suitable investments are identified. Commitments represent approximately 9 percent of the $12 billion in assets reported on September 30, 2001, while actual investments represent about one percent. Within 10 years, CPP Investment Board assets under management are expected to exceed $130 billion. The CPP Investment Board currently invests in publicly traded equities, with approximately 70 percent invested in funds based on the TSE 300 Index and 30 percent invested in U.S. and international index funds. Private market investments are expected to produce higher returns than public equity 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. Located in Toronto, 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