- Total AUM: C$42.9 bln
- Why this is important: CDPQ has become a major direct PE investor
Caisse de dépôt et placement du Québec deployed more than C$9 billion ($6.8 billion) in the global private equity market in 2018, ending the year with net assets of C$42.9 billion.
PE investments generated a net return of 16.6 percent last year, exceeding a benchmark of 8.7 percent, according to the pension fund’s financial report.
Over five years, the portfolio earned an annualized return of 12.8 percent, also exceeding the benchmark.
CDPQ has been steadily shifting its PE focus to solo deals, co-sponsorships and co-investments, Stephane Etroy, executive vice president and head of private equity, told Buyouts last March.
This is reflected in the 2018 report, which said direct deals currently account for three-quarters of PE portfolio activity. Less than a decade ago, fund commitments drove the strategy.
The report said direct investing delivered greater performance than fund investing over the past five years.
CDPQ added to its direct holdings in 2018, partnering with Brookfield Asset Management in an agreement to buy the power solutions unit of Ireland’s Johnson Controls for $13.2 billion.
It also joined Partners Group, Canada Pension Plan Investment Board and Ontario Teachers’ Pension Plan in acquiring German metering company Techem in a $5.4 billion deal.
Other activity included a $2.1 billion deal where CDPQ and Generation Investment Management acquired a majority of U.K. fintech provider FNZ, and a C$250 million investment in Canadian commercial real estate business Avison Young.
Etroy told Buyouts CDPQ has increased commitments to select fund partners as part of its direct strategy. It is also pursuing new relationships with non-fund partners, such as corporations, entrepreneurs, family offices and institutions.
CDPQ, which invests on behalf of Québec public-sector retirement and insurance plans, grew its net assets to C$309.5 billion last year. Its annualized weighted average return was 4.2 percent in 2018 and 8.4 percent over five years.
World’s largest PE investors
CDPQ is one of the world’s biggest investors in PE, according to Preqin data shared last month with Buyouts.
It ranked among the 20 largest investors based on a PE allocation of $27 billion, the data show. Heading the list was fellow Canadian pension fund CPPIB with a $60 billion allocation.
After CPPIB, the top investors are mostly fund-of-funds managers and sovereign wealth funds, such as Goldman Sachs, Kuwait Investment Authority, Pathway Capital Management, Hamilton Lane and Abu Dhabi Investment Authority.