Northleaf Capital Partners is coming off its most active fundraising season to date, announcing more than $4 billion over 12 months for its private equity, infrastructure and private credit programs.
Last week, the Toronto-based private-markets investment firm raised $1 billion from global investors for deployment across the three strategies. The lion’s share came from Canada Pension Plan Investment Board and Caisse de dépôt et placement du Québec for use in their separately managed accounts.
This follows several other fundraising milestones, including C$300 million ($225 million) secured for Northleaf Venture Catalyst Fund II, announced in June; $800 million for the private credit program, announced in April; and $2.2 billion for the PE program, announced late last year.
Fundraising increased Northleaf’s committed capital by 31 percent, bringing it to $13.5 billion. Managing Partner Stuart Waugh told Buyouts it resulted from the “coming of fruition” of the firm’s core investment platforms, which are now “functioning at scale.”
Northleaf specializes as a global mid-market player. Its oldest strategy, PE, begun in 2002 when the firm operated as the investment arm of Canadian bank TD, combines mid-market fund investments with secondary deals and direct minority investments and co-investments. It accounts for the largest share of commitments: $8.7 billion.
Similarly, a focus on infrastructure, initiated in 2012, targets direct investments in mid-market assets in OECD countries, while the newest platform, private credit, launched three years ago, is geared to direct investments in senior and junior loans going to mid-market companies. The two programs now oversee $2.6 billion and $2.2 billion of commitments, respectively.
Northleaf’s niche approach has been refined over time and in response to changing investor demand, Waugh said. For example, the firm was an early mover in the secondaries space, making its first investment in 2003. CDPQ is among the strategy’s backers.
Evolution of its approach has allowed Northleaf to tap into investors entering private markets for the first time, as well as seasoned investors aiming to expand their asset allocations, Waugh said. Through customized accounts, it has also been able to partner with both small investors looking to “scale up,” he said, and large investors looking to “scale down.”
At present, Northleaf manages commitments on behalf of 100-plus institutions, including endowments and foundations, financial institutions and pension funds, and 60-plus family offices and wealthy individuals. Investors are based in Canada, U.S., Europe and Asia.
CPPIB is Northleaf’s largest backer and has formed a longstanding partnership with the firm. Northleaf acquired an interest in Antares Capital shortly after CPPIB bought the Chicago-based mid-market lender in 2015 for $12 billion. The transaction enabled a strategic relationship with Antares, giving the private credit program access to deal sourcing opportunities.
Northleaf spun out of TD in 2009 through a management buyout led by Waugh. Other senior investment professionals who participated include Managing Directors Mike Flood and Jeff Pentland and Venture Partner and Senior Adviser Melissa McJannet.
In 2009, Northleaf had more than $2.7 billion in committed capital, managed by a 42-person team located in Toronto, London and Menlo Park. Since then, the team has more than tripled in size, to 140 employees, and additional offices opened in Chicago, Melbourne, Montréal and New York.
Action Item: Learn more about Northleaf Capital Partners here.