CPPIB Passes Caisse De Dépôt As Canada’s Largest Pension

Pension System: Canadian Pension Plan Investment Board

Assets: C$162 Billion ($157 Billion) (March 31, 2012)

Private Equity: C$26.3 Billion (March 31, 2012)

Private Equity Allocation: 16.3% (March 31, 2012)

Private Investments, Inclusive of Infrastructure & Private Debt: C$40.4 billion (March 31, 2012)

Executive Vice-President, Investments: Mark Wiseman

The Canadian Pension Plan Investment Board gained 6.6 percent in its latest fiscal year ending March 31, growing to C$162 billion (US$157 billion) and surpassing Caisse de dépôt et placement du Québec as Canada’s largest pension fund. Caisse had C$159 billion in assets as of its most recent statement on Dec. 31, 2011.

CPPIB’s invested private equity capital amounted to 16.3 percent of its portfolio, or C$26.3 billion. About C$8 billion of that was in principal investments, mostly in the form of co-investments alongside private equity firms CPPIB has had longstanding relationships with. CPPIB’s private equities group has $37 billion in committed capital overall.

In a statement, David Denison, the CPPIB’s outgoing chief executive, said its investments “delivered a strong performance in fiscal 2012 despite challenging global equity markets.” Denison, who has been in his role since 2005, plans to step down in June. He is to be replaced by Mark Wiseman, currently CPPIB’s executive vice president for investments.

Overall, CPPIB added C$13.4 billion in assets during the last year, and three quarters of that was from investment returns. The fund’s 6.6 percent overall return handily beat both the S&P-TSX Composite Index, which fell by 12.2 percent over the 12 months ended March 31, as well as the S&P 500 index, which gained 6.2 percent over that period. CPPIB invests 60 percent of its assets outside of Canada.

The pension’s 10-year performance is one of the world’s best, returning an average of 6.2 percent annually for the last decade, a performance that ranks it just a bit behind the C$117 billion Ontario Teachers’ Pension Plan, the world’s best performing pension fund, which returned an average of 8 percent over the last decade.

In 2011-2012, the pension completed a number of notable investments, especially in its private equities group. Perhaps none was more widely reported than its sale of Skype, which CPPIB sold with Silver Lake Partners, to Microsoft for $8.5 billion. At the time of the sale, less than two years after it bought Skype, CPPIB’s stake was worth C$964 million, nearly three times its initial C$329 million investment.

In part due its size and readiness to sign off quickly on large private investments, CPPIB said that for three years running, it has been involved in either the world’s largest or second-largest private equity transactions. In 2011-2012, the world’s second-largest private equity transaction was CPPIB’s $6.1 billion deal to buy Kinetic Concepts, a medical technology company, in partnership with Apax Partners and the C$58 billion Public Sector Pension Investment Board, another Canadian pension fund.

Another notable 2011 deal was CPPIB’s $1.6 billion purchase of 99 Cents Only Stores in partnership with Ares Management and the Gold/Schiffer family.

CPPIB, which was founded in 1997, is similar to other Canadian pension plans in that it has emphasized “do it yourself investing,” especially within the private equity space. Unlike Ontario Teachers and the C$55 billion Ontario Municipal Employees’ Retirement System, which make most of their private equity investments on their own, CPPIB typically makes most of its direct private equity investments as co-investments in partnership with private equity firms, such as Silver Lake, Apax and Ares Management.