Canada's CPP Investments makes $404m PE commitments in Asia in Q2

Ontario, Canada. Photo by LinedPhoto on Unsplash

The Canada Pension Plan Investment Board (CPP Investments) one of the world’s largest pension funds, has made a total of at least $404 million in private equity commitments in Asia, including China and India, in the second quarter of this year, its latest report showed.

In the April-June quarter, CPP Investments committed to a $120-million co-investment alongside CVC Capital into Sajjan India Limited, a specialised agrochemical manufacturer in India, for up to a 17% stake. It also committed $100 million to Trustar Capital V, the latest fund of Trustar Capital Partners, which focuses on control-oriented buyouts in Greater China.

CPP Investments also committed to a $50-million co-investment alongside Multiples into Acko Tech & Services, India’s pure-play digital insurance platform focused on retail customers, and another $34 million into Kogta Financial Limited, a non-banking financial company in India, for an approximate 9%.

The pension fund likewise closed a $35-million co-investment alongside CVC Capital into gaming hardware maker Razer Inc, which delisted in May.

In South Korea, CPP Investments committed $65 million alongside Anchor Equity Partners into Fresheasy, a home meal kit distributor, for an approximate 9% stake.

Aside from PE commitments to Asian funds and companies during the quarter, CPP Investments also closed an aggregate commitment of $333 million to Sequoia Capital’s 2022 fundraising, which includes commitments to the Sequoia China funds and the Sequoia India/Southeast Asia funds.

In June, Sequoia Capital, one of the world’s top venture capital firms, announced that it has raised $850 million for its first fund dedicated to the Southeast Asia region. The vehicle, Sequoia SEA Fund I, will double down the firm’s focus on the region, investing actively at the seed, Series A, and growth stages, according to the announcement.

CPP Investments also committed $150 million to NewQuest Asia Fund V of NewQuest Capital Partners. NewQuest’s funds primarily target companies across emerging Asia, focusing on minority and control transactions of $25-75 million per company, and $50-250 million for portfolio acquisitions.

Under its credit investments programme, the Canadian pension fund said it invested $100 million in the unitranche loan for IGT Solutions, a business process outsourcing company specialized in airlines, online ticket agencies, and hospitality. IGT Solutions operates primarily in India and the Philippines.

The April-June quarter also saw CPP Investments agreeing to dispose of six logistics warehouses in Western China in the Goodman China Logistics Partnership (GCLP) for approximately C$320 million.

Negative returns in April-June quarter

The PE commitments to Asian funds and companies came even as CPP Investments returned a negative 4.2% in the April-June quarter, driven by losses in public equity strategies due to the broad decline in global equity markets.

Investments in private equity, credit, and real estate contributed modestly to the losses this quarter, according to the quarterly report.

The fund ended its first quarter of fiscal 2023 on June 30, 2022, with net assets of $523 billion, compared to $539 billion at the end of the previous quarter.

However, CPP Investments said the negative returns outperformed returns for leading global indices that decline, on average, well into double-digit territory.

“The uncertain business and investment conditions we noted in the previous quarter continue, and we expect to see this turbulence persist throughout the fiscal year, said CPP Investments president and CEO John Graham.

Despite the negative returns in the quarter, Graham continued to express confidence that the pension fund will be able to deliver solid performance over the long term.

“Looking ahead, I remain cautiously optimistic – cautious on the markets but optimistic and confident about CPP Investments’ ability to navigate markets and add value in the best interests of 21 million CPP contributors and beneficiaries,” he stressed.

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