CPPIB's Asia private equity exposure tops $13b

The pension plan closed six direct investments for C$1.6 billion, made C$1.7 billion in commitments to eight funds, and closed three secondary transactions for C$400 million. Distributions came to C$800 million. CPPIB noted in its annual report that there had been an increase in large deals and control ownership transactions in Asia, while Greater China accounted for the bulk of overall activity.

The increase in Asian exposure follows a nearly 25% jump the previous year. Exposure totaled just C$1.7 billion as recently as the 2013 financial year. The carrying value of the Asia private equity portfolio rose from C$8.7 billion to C$12.4 billion, contributing to C$39.4 billion increase in CPPIB's net assets to C$356.1 billion. The global private equity portfolio was valued at C$72.4 billion, up from C$58.6 billion a year earlier.

The six direct investments in Asia – the C$1.6 billion committed is double the 2017 total – were led by the $4.3 billion take-private of Nord Anglia Education, a joint deal with Baring Private Equity Asia. CPPIB also invested $250 million in Internet Plus Holdings, the parent vehicle for Chinese online-to-offline services platform Meituan-Dianping. This was part of a $4 billion round that valued the company at about $30 billion.

The other direct investments were not disclosed, and the transactions listed on the pension fund's website do not specify the financial year in which they closed. However, recent deals include: Anchor Equity Partners' spin-out of Korean coffee shop chain A Twosome Place; PAG Asia Capital's take-private of Yingde Gases; and CITIC Group, CITIC Capital, and The Carlyle Group's investment in the McDonald's China and Hong Kong business.

On the funds side, as of December 2017, commitments dated 2017 included: $375 million for Carlyle Asia Partners V; $360 million for FountainVest China Capital Partners Fund III; $350 million for KKR Asian Fund III; $450 million for MBK Partners Fund IV; $125 million for True North's latest India vehicle; and $225 million for China-focused Trustbridge Partners VI. There was also an investment in Alibaba Group's New Retail Strategic Opportunities Fund, which targets private and public deals.

The secondary deals were not disclosed either, but CPPIB is known to have completed a structured financing – comprising a preferred equity security and a primary capital commitment – for Olympus Capital Asia.

The pension fund said that the strongest net returns in Asia were generated by its direct investments, notably those in China, India, and Japan. It added that Chinese deals were responsible for most of the investment gains in the region and earned significantly higher net returns than the rest of the portfolio.

The net nominal return on CPPIB's entire portfolio across all asset classes and geographies was 11.6% for the year ended March 2018, compared to 11.8% the previous year. Returns on a five-year and a 10-year basis were 12.1% and 8%, respectively.

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• Topics
• LPs
• Performance
• North America
• Fundraising
• Asia
• Co-investment
• Canada Pension Plan Investment Board (CPPIB)