October 09, 2002
The CPP Investment Board announced today a further expansion of its Canadian private equity investment strategy with a commitment of venture capital to its eighth domestic fund manager.
The CPP Investment Board is one of four institutional investors joining respected Canadian entrepreneur Terry Matthews as a limited partner in a venture capital fund managed by Celtic House to invest in early stage high tech companies specializing in storage, telecommunications, networking and internet infrastructure. The involvement of Paul Capital Partners, a U.S. private equity firm and strategic partner of the CPP Investment Board, was instrumental in developing the Celtic House fund structure.
“Putting Canada Pension Plan money to work in fostering profitable start-up companies is one of the best investments we can make for Canadians,” commented Mark Weisdorf, Vice President – Private Market Investments at the CPP Investment Board. “This venture capital vehicle will contribute to an innovative technology sector by giving new enterprises a better chance of getting on their feet and fulfilling their growth potential. For CPP contributors and beneficiaries, a diversified portfolio of venture capital investments is an attractive long-term alternative to investing in volatile public equity markets.”
The CPP Investment Board’s commitment of approximately $20 million to Celtic House brings to more than $1 billion the total pledges to Canadian private equity investments, of which $517 million is targeted at venture capital opportunities and $509 million at buyout opportunities.
The CPP Investment Board expects to provide up to 10 percent of new venture capital raised in Canada. Other Canadian private equity commitments made since June, 2001 are to EdgeStone Capital Partners, MDS Capital Corp, Skypoint Capital, Kensington Capital Partners, Clairvest Group Inc., Borealis Capital Corporation, and Brascan Financial Corporation. Both EdgeStone and Kensington Capital have since leveraged the CPP Investment Board commitments by investing in smaller venture capital and buyout funds.
The CPP Investment Board has also committed $3 billion to U.S. and European venture capital and buyout funds.
The CPP Investment Board plans to invest up to 10 percent of total assets in private equity. To date, $4.1 billion has been committed to 28 limited partnerships managed by 24 private equity firms. The commitments will be drawn down for investment over the next several years. As of June 30, 2002, $650 million, or approximately 3.8 percent of the CPP Investment Board’s total assets, has been invested in private equity.
The remainder of the CPP Investment Board’s assets are primarily invested in funds that replicate stock indexes for Canadian, U.S. and non-North American publicly traded equities. Private equity is expected to produce higher returns than public equity over the long term.
Created in December 1997, the CPP Investment Board is a crown corporation that invests funds not needed by the Canada Pension Plan to pay current pensions. Cash flows are invested 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