The new head of private markets at Canada’s Public Sector Pension Investment Board (PSP Investments) is off to a running start after being quietly hired by the system last fall.
Guthrie Stewart, named PSP’s senior vice president and global head of private investments in September, was the pension fund’s point man on last month’s proposed buy of AIG Advisor Group, a New York-based broker-dealer network. PSP is partnering with Lightyear Capital in acquiring the business from AIG.
In a statement, Stewart said the Advisor Group deal is in line with PSP’s PE strategy “of making sizable, direct investments in high-quality companies alongside experienced partners.”
Stewart, formerly a partner at EdgeStone Capital Partners, manages PSP’s investments in infrastructure, natural resources and private equity, a PSP spokesperson told Buyouts.
That puts him in charge of some C$18.7 billion ($13.8 billion) of assets, including C$10.1 billion ($7.5 billion) in private equity, according to PSP’s website. PE investments have a target weighting of 14 percent of PSP’s entire portfolio.
Stewart’s position is new; responsibility for PSP’s private-market portfolios had been divided. Before he was hired, private equity was headed for more than a decade by Derek Murphy, while infrastructure was overseen for almost as long by Bruno Guilmette. Murphy and Guilmette appear to have left these senior divisional posts sometime last year.
PSP did not respond to a request for comment.
In addition to leading a greatly enlarged operation, Stewart will likely focus on finding more deals like Advisor Group. That’s because PSP has given top priority to scaling investment volumes to match up with its fast-growing asset base.
Montréal-based PSP manages the pension savings of Canada’s federal public service, including the armed forces and Royal Canadian Mounted Police. Its capital pool, already one of Canada’s largest at C$112 billion ($83 billion), is projected to grow to C$150 billion by 2020 and C$200 billion by 2024.
PSP reported a gross total portfolio return of 14.5 percent at the end of March 2015, and a five-year annualized return of 11.7 percent. Private equity turned in a one-year return of 9.4 percent, and a five-year return of 15.4 percent.
PSP has a mixed PE strategy, relying on fund partnerships, direct deals and co-investments, according to its website. Directs and co-investments are playing an increasingly important role in the portfolio. Currently making up 40 percent of all PE assets, individual investments are targeted at C$100 million to C$500 million and held for terms of as long as 10 years.
PSP holds significant direct stakes in several private companies. They include Telesat, a Canadian satellite operator bought in 2007 by the pension fund and Loral Space & Communications for C$3.25 billion. Loral has since tried to monetize its stake; however, a $7 billion bid from PSP and Ontario Teachers’ Pension Plan was reportedly scuppered last year due to financing issues.
Along with Advisor Group, PSP’s recent investments include the purchase of Charlotte, N.C.-based insurance distributor AmWINS Group. Announced last April, the deal gave the system an equal share in the company alongside New Mountain Capital and AmWINS’ employees. Several months later, PSP joined with ATL Partners in backing Dublin’s SKY Leasing, an aircraft leasing platform.
PSP has also been active in the infrastructure space. In February, for example, it struck a deal to acquire a New England portfolio of hydroelectric assets from France’s Engie for $1.2 billion.
As reported by Buyouts last November, PSP has also unveiled a private-debt affiliate that aims to deploy roughly $4 billion over the next three years. To run it, the pension fund hired David Scudellari as its credit chief.
Scudellari’s private-debt operation swung into action in February, taking a piece of the financing of Apollo Global Management’s proposed $7 billion purchase of U.S. security company ADT Corp.
Stewart and Scudellari are not the only fresh faces in PSP’s top ranks. Last March, the pension fund named André Bourbonnais its president and CEO. Bourbonnais was previously senior managing director and global head of private investments at Canada Pension Plan Investment Board.
Along with this PE background, Stewart spent 15 years in executive jobs in the telecom industry, including as president and CEO of Teleglobe Canada. Immediately prior to joining PSP, he served as a corporate director and investment advisor, and taught at McGill University as an adjunct professor, according to his LinkedIn profile.
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