January 8, 2002
The CPP Investment Board announced today a commitment of up to US$100 million over six years to a new “fund of funds” focused on investing in North American venture capital funds.
Paul Capital Top Tier Investments II is managed by Paul Capital Partners, a U.S. private equity firm. With a target size exceeding US$500 million, the fund will build a diversified portfolio of investments in high-performance venture capital funds. The new fund has already closed on eight venture capital funds created in the past two years.
The CPP Investment Board already has a strategic alliance with Paul Capital Partners through a US$90 million commitment over four years to Paul Capital Partners VII, L.P., which acquires U.S. and European limited partnership interests in the secondary markets.
“Paul Capital Partners has the expertise to track and access top decile venture capital firms and leverage its existing activities in the secondary market,” commented Mark Weisdorf, vice president responsible for private market investments at the CPP Investment Board. “We are impressed by the ingenuity, resources and success rate of Paul Capital’s team which already manages more than US$2 billion in assets.”
In June, the CPP Investment Board announced it would ultimately invest up to 10 percent of assets in private equity. To date, approximately C$2.1 billion has been committed to 10 private equity firms. This amount will be drawn down over the next four to six years. While these commitments represent approximately 17 percent of the C$12 billion in assets reported on September 30, 2001, actual investments represent less than three percent. The CPP Investment Board’s assets are growing rapidly and within 10 years are expected to exceed C$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:
Vice President – Private Market Investments