Canada Pension Plan Investments Lose 0.7% in 1st Half of Fiscal 2024

The Canada Pension Plan Investment Board reported a 0.7% investment loss for the first half of fiscal 2024 after eking out a 0.1% return for the second quarter that ended Sept. 30. The pension giant’s asset value nudged up to C$576 billion ($418.1 billion) from C$575 billion at the end of the first quarter.

The pension fund also reported a 10-year annualized net return of 9.6% and a five-year annualized net return of 7.3%. According to the board statement, during the 10-year period up to the end of the second quarter of fiscal 2024, it has earned approximately C$311 billion in cumulative net income.

Despite registering an investment loss for the first half of the fiscal year, the pension fund’s asset value still grew by C$6 billion, as C$10 billion in net CPPIB contributions offset a net loss of C$4 billion. The roughly C$1 billion increase in net assets for the second quarter was the result of C$488 million in net income and C$700 million in net transfers from the Canada Pension Plan.

“Our diversified portfolio remains resilient, and while we expect these challenging investing conditions to persist for the near term, we are confident that our active management strategy will continue to deliver positive long-term results for CPP contributors and beneficiaries,” CPPIB President and CEO John Graham said in a statement.

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Within its investment portfolio, the pension fund reported a positive performance among its credit and private equity investments, as well as among U.S. dollar-denominated assets, which benefited from the U.S. dollar’s relative strength as compared with the Canadian dollar. However, returns were offset by fixed-income losses that the board attributed to continued high interest rates and a weak public equities performance as global markets slid.

Earlier this week, the CPPIB also completed the sale of a portfolio of 20 limited partnership fund interests in mostly North American and European buyout funds. The pension fund sold the portfolio, which represents commitments made over approximately 20 years, to Paris-based private investment house Ardian for net proceeds of C$2 billion.

“This transaction was undertaken as part of our active portfolio management activities,” Suyi Kim, CPPIB’s global head of private equity, said in a statement. “As a systematic buyer and seller in the secondaries market, we see this sale as an attractive opportunity to optimize the construction of our portfolio and to allow us to further support future investments.”

Meanwhile subsidiary CPPIB Renewables Europe agreed last week to sell its 24.5% stake in two German offshore wind assets to a subsidiary of Canadian pipeline and energy company Enbridge Inc. for net proceeds of C$374 million.

The wind farms are located off Germany’s North Sea coast and began operating in 2019 and 2020. They produce a combined 2.5 million megawatt hours of electricity and provide energy to more than 700,000 homes. CPP Investments acquired the assets as development projects from Enbridge in 2018.

“The European offshore wind market has continued to mature, and we’ve realized solid returns during our ownership,” Bill Rogers, CPPIB’s global head of sustainable energies, said in a statement. “The renewable energy sector, and offshore wind specifically, remains an important investment strategy for us, and we will continue to seek opportunities in the sector that best fit the scale and flexibility of our capital.”

The deal is expected to be completed by the end of 2023.

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Tags: Ardian, Bill Rogers, buyout fund, Canada, Canada Pension Plan Investment Board, CPPIB, CPPIB Renewables Europe, Enbridge, John Graham, Pension Funds, second quarter of 2023, secondaries, Suyi Kim, wind assets

The New York State Common Retirement Fund committed more than $1.3 billion in investments in August, more than half of which were earmarked for its real estate portfolio.

The pension giant committed $400 million to refinancing an existing loan secured by a building and land on Fifth Avenue in New York. It also set aside another $300 million for the Asana Partners’ Select Fund managed by privately held real estate investment company Asana Partners. The fund is a fund-of-one structure focused on core and core-plus retail and mixed-use properties in and near urban neighborhoods in the U.S. The strategy of the fund is to acquire retail and mixed-use properties in high barrier-to-entry neighborhoods in areas targeted for job growth, population growth and income growth.

The NYSCRF also committed slightly more than $111.4 million within its real estate portfolio to a Lowe’s Bulk Distribution Center managed by MetLife Investment Management. The distribution center is a 1.2 million-square-foot industrial building in Savannah, Georgia, that is 100% leased to Lowe’s Companies Inc.

Within its private equity portfolio, the pension fund committed $250 million to the PSG VI fund from PSG Equity, which will target software and tech-enabled businesses in the B2B-software, cyber security, big data and artificial intelligence sectors, primarily in North America. It also set aside $175 million for the 57 Stars Global Opportunity Fund, which will seek out emerging market co-investment transactions in companies in “emerging Europe,” primarily Northern Ireland, and other emerging markets in sectors with strong growth trends.

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The pension fund also earmarked $100 million within its opportunistic absolute return strategies to the North Haven Tactical Value Fund II Co-Investment Excelsior fund managed by Morgan Stanley Investment Management. The investment is described as a fund-of-one that focuses on co-investment opportunities.

During the month, there was no activity within the pension fund’s public equity, credit, real asset, emerging manager or multi-asset strategic partnership portfolios.