February 9, 2004
The CPP Investment Board today announced a co-investment with Paul Capital Partners in a secondary acquisition of private equity fund interests.
The CPP Investment Board has agreed to commit US$120 million to CPP Investment Board-Paul Capital Holdings II, the US$310-million limited partnership that will acquire the secondary portfolio. This portfolio, which will be managed by Paul Capital Partners, consists of a diversified portfolio of private equity partnership interests, primarily consisting of US buyout funds.
“This transaction continues our strategy of leveraging our internal capabilities with our external partners,”says John MacNaughton, President and Chief Executive Officer, CPP Investment Board. “We continue to take advantage of an active secondary market to provide us with earlier distributions, attractive returns and enhanced diversification.” Acquisitions of limited partnership interests from the existing limited partner investors are known as secondary acquisitions. Secondary acquisitions can provide enhanced diversification, as they often comprise of a number of underlying funds across a wide variety of vintage years and sponsors. This commitment brings the CPP Investment Board’s private equity commitment to a total of $6 billion committed to 42 limited partnerships managed by 36 private equity firms. Commitments to secondary portfolios currently make up approximately 17.5 percent of the CPP Investment Board’s private equity portfolio.
The total Canada Pension Plan portfolio, which includes contributions to the Canada Pension Plan net of benefits paid, is $64.4 billion. The CPP Investment Board plans to invest up to 10 percent of the total portfolio in private equity. CPP Investment Board 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 and real estate 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 Canada Pension 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 more information on the CPP Investment Board, visit www.cppib.ca.
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Manager – Communications and Stakeholder Relations