Fresh blood and promotions are being brought into the top team of Canada’s biggest public pension fund, the US$394 billion CPP Investments, which is promoting global talent at board and management levels.
This week, the Toronto-based fund announced two new appointments to its board of directors, including former Sun Life CEO Dean Connor and former Fortis CEO Barry Perry. Connor has decades of experience in the financial services sector and should lend his professional strength to CPP’s investments in the finance and insurance sector, such as its ownership of Ascot Group and BGL Group. Perry has long-standing involvement in the utilities and oil refining sectors, where the fund has a high level of exposure.
Aside from board level appointments, CPP has made new appointments at management level. They include Korean national Suyi Kim who has been promoted from head of Asia-Pacific to global head of its US$100 billion private equity portfolio. She joined the fund in 2007 and established its first international office in Hong Kong. She previously worked for Ontario Teachers’ Pension Plan (OTPP) and The Carlyle Group. She replaces Shane Feeney, who left CPP last month after 11 years to lead the global secondaries business of private markets investment firm Northleaf Capital Partners.
Meanwhile, German national Maximilian Biagosch has been appointed head of direct private equity, replacing Ryan Selwood. Biagosch is currently the fund’s head of portfolio value creation, but there is as yet no replacement for this position. He previously worked for seven years at Permira Advisers, focusing on private equity transactions, and was most recently responsible for the firm’s global capital markets activities. Prior to that, he was an investment banker for Deutsche Bank and BNP Paribas in London.
CPP reported a net return of 20.4% for the fiscal year ending March 31, notching up an annualized net return of 10.8% and 11.0%, respectively, for five and 10 years. Its AUM leaped 27%. Energy and resources reported the highest net return at 45.8%, followed by Canadian equities (40.8%), emerging markets private equities (38.5%), emerging markets equities (34.0%) and international private equities (34.0%).
However, the strength of the Canadian dollar led to foreign-exchange losses of C$35.5 billion. The public pension fund also underperformed its benchmark portfolio, which returned 30.4%. As such, CPP reported a single-year net dollar value-added of negative C$35.2 billion, after deducting all costs. Despite these downsides, the fund is exceeding its own expectations with AUM C$48 billion above its projection of C$449 billion – and exceeding its target for FY2022. The fund has a long-term AUM target of C$879 billion by 2030 and C$1.68 trillion by 2040.
Looking for opportunities for future growth, CPP Investments is set to increase its exposure to Asian markets which represented 24% of AUM in FY2021 - particularly in its real estate and infrastructure portfolios. Last month, it established a data centre joint venture with Mitsui, and allocated approximately US$320 million in equity into the venture.
Logistics real estate has come to the fore in the public pension fund’s Asia strategy. In January, it made shown a US$200 million commitment to a US$1 billion logistics real estate joint venture in Indonesia and is working with LOGOS to "develop a diversified portfolio of facilities targeted at third party logistics (3PL), data centre and industrial tenants."
In India, it has taken a different tack, signing an office venture with Indian property developer RMZ in April. The deal targets a portfolio of US$1 billion of office property in Chennai and Hyderabad. This month CPP announced plans to increase its stake in IndInfravit, a road concession portfolio, from 27.9% to 43.8% at a cost of more than INR10 billion (US$142 million). Earlier this year, it was one of the top anchor investors in PowerGrid Infrastructure Investment Trust (InvIT) public issue, committing nearly INR8 billion (US$109 million). CPP also invested INR15 billion (US$210 million) in a joint venture with RMZ, one of the largest privately owned real estate developers in India, to develop and hold commercial office space in Chennai and Hyderabad.
Also in April, CPP Investments ramped up its commitment to a South Korean logistics real estate joint venture with ESR Cayman, doubling the total capital to US$1 billion with the Canadian public pension fund contributing most of the increase. The JV was established in August 2018 and consisted of 12 logistics facilities, of which six were sold to ESR Kendall Square’s Korean Logistics REIT in December 2020.