December 21, 2001
The CPP Investment Board announced today commitments of US$500 million to three private equity funds for investment over the next several years in private companies.
The commitments are:
• Up to US$200 million to be drawn down over five years by Global Private Equity IV, and a structured co-investment program, sponsored by Advent International Corporation, a global private equity firm. With an expected size exceeding US$1.5 billion, the fund will focus on investing in buyout opportunities in a diversity of economic sectors in Western Europe and North America. Founded in 1984 and based in Boston, 75 percent of Advent’s investment professionals are located outside the U.S. in 16 countries.
• US$200 million to be drawn down over six years by Blackstone Capital Partners IV L.P., a private equity fund sponsored by The Blackstone Group, a New York based merchant bank. The fund, with a target size of US$5 billion, will invest in large buyout opportunities primarily in North America and Western Europe. Since its inception, Blackstone has raised more than US$17 billion for 10 separate alternative investment funds. The firm was formed in 1985 and has strong support for all of its funds from U.S. and overseas pension funds. Blackstone’s largest limited partner is its employees.
• US$100 million to be drawn down over three years by CSFB Global Opportunities L.P. With commitments exceeding US$1.5 billion, the fund will invest in distressed securities, usually debt, with the ultimate goal of acquiring control of companies requiring reorganization. The CSFB (Credit Suisse First Boston) team has been investing in the distressed market since 1994 and including this particular fund, manages more than US$2.5 billion.
“All three funds are managed by teams with impressive track records in their areas of specialization,” commented Mark Weisdorf, vice president responsible for private market investments at the CPP Investment Board. “We chose these teams for their results, ability to identify quality investment opportunities, and willingness to offer us co-investment opportunities
“ In June, the CPP Investment Board announced it would ultimately invest up to 10 percent of assets in private equity. To date, approximately $1.9 billion has been committed to private market investments. These commitments represent approximately 16 percent of the $12 billion in assets reported on September 30, 2001, while actual investments represent about one percent. The CPP Investment Board’s assets are growing rapidly and within 10 years are expected to exceed $130 billion. During this period, the commitments made to date will be drawn down by fund managers as suitable investments are identified. 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:
Mark Weisdorf
Vice President – Private Market Investments
416-868-1538