CPPIB eyes Asia private equity to counter the Q2 blues
The Canada Pension Plan Investment Board (CPPIB) ended its April-June quarter with net assets of $523 billion - a decrease of 4.2% compared with the $539 billion at the end of the previous quarter - but still outperformed leading global indices despite the challenging conditions.
The negative returns in CPPIB’s portfolio were mainly attributed to losses in public equity strategies which had been affected by the broader decline in global equity markets, according to its quarterly report.
Meanwhile investments made in private equity, real estate and private credit also made a small contribution to the pension funds overall decline.
“Financial markets experienced the most challenging first six months of the year in the last half century, and the fund’s first fiscal quarter was not immune to such widespread decline," John Graham the president and CEO of CPP Investments said in an official release.
"However, our active management strategy – diversified across asset classes and geographies – moderated the impact on the fund, preserving investment value.”
Despite the negative returns, CPPIB stated in a press release that the fund’s returns outperformed the leading global indices which experienced double-digit declines.
Graham said he remains cautiously optimistic about the pension fund’s ability to deliver solid returns over the the long-term.
“Cautious on the markets but optimistic and confident about CPP Investments’ ability to navigate the markets and add value in the best interests of the 21 million CPP contributors and beneficiaries,” said Graham.
ASIA PRIVATE EQUITY
CPPIB’s latest quarterly report revealed that the pension fund had committed around $409 million to private equity deals within Asia, which included investments in China and India.
The Canadian pension fund alongside CVC Capital co-invested $120 million for a 17% stake in Sajjan India Limited — an agrochemical manufacturer in India. CPPIB also committed $100 million to Trustar Capital V "the private equity affiliate of CITIC Capital focused on control-oriented buyouts in Greater China", according to the official release.
CPPIB committed to a $50 million co-investment alongside Multiples into Acko Tech & Services, India’s only pure-play digital insurance platform focused on retail customers. Once all funding is deployed, the fund will hold an approximate 5% stake.
Also in India, the pension fund made a $34 million investment alongside Multiples into Kogta Financial Limited, a non-banking financial company focusing on new and used vehicle financing and lending to micro, small and medium enterprises in semi-rural areas in the country, for an approximate 9% stake.
The pension fund also closed a $35 million co-investment alongside CVC Capital into Razer Inc., a global lifestyle brand for gamers, which provides gaming peripherals, laptops and desktops, accessories and software solutions worldwide.
In South Korea, CPPIB invested $65 million alongside Anchor Equity Partners into Fresheasy, a home meal kit distributor in South Korea, for an approximate 9% stake.