Caledon Capital to go global with CBRE deal

  • David Rogers, former OMERS PE chief, founded Caledon
  • Caledon manages $9 bln assets
  • CBRE deal to build client base, expand geographic presence

CBRE Group’s agreement to acquire a majority stake in Caledon Capital Management promises to boost the Toronto investment manager’s access to institutional clients and deals worldwide.

CBRE, a Los Angeles real estate firm, last week said it would buy a control position in Caledon. Expected to close shortly, the deal is less about an ownership change than it is about “bringing on a strategic partner to grow the business,” Caledon Partner David Rogers told Buyouts. He declined to disclose terms of the deal.

Customized portfolios

Rogers, formerly head of private equity at Ontario Municipal Employees Retirement System, launched Caledon a decade ago to help institutional investors find new ways to access alternative assets.

The firm, which manages C$9 billion (US$7 billion) in assets, has specialized in designing portfolio accounts in infrastructure and PE. Each solution is customized to each client’s preferences and risk tolerance, combining funds, co-investments, direct investments and secondaries.

Caledon found a ready market for the strategy, especially among small and midsized North American institutions looking to participate in deal opportunities that are usually available only to large institutions.

It was this strategy that drew CBRE to Caledon, Rogers said. CBRE saw in the firm a potential partner that could support expansion of its investment platform and supplement its offering to institutional clients with private-market options, such as infrastructure, real assets and debt.

The collaboration, proposed earlier this year, was welcomed by Caledon as an opportunity to broaden its client list and increase its geographic footprint, Rogers said.

“We’ve been approached many times before, but this time we thought there was a real benefit to both sides,” he said. “It’ll give us the ability to build a global club of institutional clients with a sophisticated, long-term and value-adding strategic partner.”

With the deal’s close, Caledon will be rebranded as CBRE Caledon Capital Management and operate as a separate unit under CBRE’s investment subsidiary, CBRE Global Investors.

Holding a “large minority stake” in the new entity, Caledon’s partners will continue to exert influence, nominating two members to a five-person oversight board, Rogers said. Rogers and Partner Martin Day will fill these seats. Other members will include Ritson Ferguson, CEO of CBRE Global Investors.

Current management will continue running the business, Rogers said.

At the same time CBRE Caledon will benefit from organizational synergies, he said. Leveraging the resources of the US$86.5 billion CBRE Global Investors will strengthen its capacity to scout client prospects, introduce fresh talent and source deal flow.

Growth and recruitment

Founded in 2007, Caledon signed up its first institutional client in 2008.

The firm then grew rapidly, particularly since 2014, when managed assets nearly doubled. During this period, the firm signed several clients, including Illinois Teachers’ Retirement System, Newfoundland and Labrador Pooled Pension Fund, Newfoundland Teachers’ Pension Plan and the Salvation Army’s pension and endowment funds.

Caledon’s team also grew to include senior investment pros recruited from Abu Dhabi Investment Authority, Canada Pension Plan Investment Board, OMERS and Ontario Teachers’ Pension Plan. Today, the firm’s personnel number more than 30.

Over time, Caledon has committed C$6.5 billion to infrastructure and PE funds, co-investments, direct investments, and secondaries in North America, Europe and Australasia. More than three-quarters of the amount has gone into the infrastructure space.

In addition to Rogers and Day, Caledon is led by Partners Stephen DowdAsif HussainJustin Kusinskis and Jeff DeBlock, as well as COO and finance head Dennis Pellarin.

Torys LLP and Deloitte Canada advised Caledon on the CBRE deal.

Action Item: Contact Caledon:

David Rogers, founding partner of Caledon Capital Management. Photo courtesy of the firm.