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Alternatives

CPPIB Continues to Bulk Up on Renewable Energy

Canadian pension giant invests twice as much in renewable energy in 2020 as it did in 2019.
By Michael Katz


The Canada Pension Plan Investment Board (CPPIB), Canada’s C$434.4 billion (US$327.7 billion) pension giant, continues to raise its bet on renewable energy by more than doubling its investments in renewable energy firms in 2020 to C$6.6 billion, after nearly doubling it the previous year.

The pension fund reported in its annual sustainable investing report that renewable energy investments now make up 1.5% of its entire portfolio, up from 0.76% last year and 0.41% in 2018. As recently as 2017, renewable energy accounted for a scant 0.02% of the fund.

“CPP Investments’ exposure to renewables is aligned with our belief that the energy evolution provides opportunities for attractive long-term, risk-adjusted returns,” CPPIB said in the report.

In March, the fund acquired Pattern Energy Group Inc., a renewable energy company that owns a portfolio of 28 renewable energy projects in Canada, the US, and Japan. It was among the fund’s largest transactions of the year, which had an enterprise value of approximately US$6.1 billion, including net debt.

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“Pattern Energy is supported by a strong management team and offers both a large existing portfolio and potential for growth, with several ongoing projects in development,” said the fund, adding that the firm is also well positioned “to capitalize on opportunities supporting electrical grids in both North America and Japan as they transition from fossil fuels to green energy sources.”

And in May the fund signed a deal with natural gas distributor Enbridge Inc. to acquire 49% of the entity holding Enbridge’s stake in Éolien Maritime France SAS, Enbridge’s partnership with EDF Renewables. The fund said the partnership is developing three offshore wind farms in France, which are expected to become operational between 2022 and 2024. It also said that it expects to continue investing in similar opportunities in the European offshore wind sector through its Maple Power joint venture with Enbridge Inc.

Additionally, the report said the COVID-19 pandemic has reaffirmed its belief in the importance of incorporating environmental, social, and governance (ESG) issues into the investment process. It also said it has a clear preference for ESG disclosures to focus on performance and targets, rather than just policies. It said that when issuers seek the fund’s input, it now indicates a preference for companies to align their reporting with the standards of the Sustainability Accounting Standards Board (SASB) and the Financial Stability Board’s Task Force on Climate-related Financial Disclosures (TCFD).

“We believe that by fully considering ESG risks and opportunities, we become better investors and are able to enhance returns and reduce risk for the fund’s more than 20 million contributors and beneficiaries,” Mark Machin, president and CEO of CPPIB, said in a statement. “Addressing sustainability is not just pressing for society and the planet—it is a business imperative.”

Related Stories:

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Canada’s CPPIB Doubles Renewables Investment

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Home > News > Regulation > Investment Firm Head Sentenced to More Than 7 Years in Prison for Pre-IPO Fraud
Regulation

Investment Firm Head Sentenced to More Than 7 Years in Prison for Pre-IPO Fraud

Fred Elm falsely told investors they could invest in Twitter, Alibaba, and Uber prior to their IPOs.
By Michael Katz


Fred Elm, founder and manager of Elm Tree Investment Advisors (ETIA), has been sentenced to more than seven years in prison for his role in a scheme to defraud investors by leading them to believe they could invest indirectly in Twitter, Alibaba, Uber, Square, Pinterest, and GoDaddy prior to the firms’ initial public offerings (IPOs).

According to the US Attorney’s Office for the Southern District of New York (SDNY), Elm—also known as Frederic Elmaleh—and Ahmad Naqvi, Elm Tree’s chief operating officer (COO), fraudulently convinced more than 50 investors to invest over $18 million in multiple investment funds created and controlled by Elm and Naqvi. The two falsely told investors that they would be able to invest into the well-known privately held tech companies before their IPOs through the Elm Tree funds.

However, that never happened and the majority of investor funds were instead misappropriated for personal use, lost through poor trading, or used to repay investors in a Ponzi-like scheme, according to the SDNY.  Elm used the ill-gotten funds to purchase a multimillion-dollar home, high-end furnishings, jewelry, and luxury automobiles, including a Bentley, a Maserati, and a Range Rover.

According to the indictment charging Elm and Naqvi, their scheme to defraud investors stretched from at least June 2013 through December 2014. The 50 investors invested in four limited partnerships for which ETIA acted as the fund manager: Elm Tree Investment Fund LP; Elm Tree Emerging Growth Fund LP; Elm Tree ‘e’Conomy Fund LP; and Elm Tree Motion Opportunity LP.

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Elm and Naqvi claimed they had access to the pre-IPO shares because of their relationships with venture capital (VC) firms such as Kleiner Perkins Caufield & Byers, Benchmark Capital, and Silver Lake.  However, in reality, Elm and Naqvi did not invest in the pre-IPO shares of these companies and did not have relationships with the VC firms.

The SDNY said the Elm Tree Funds never returned a profit and had lost approximately $3.9 million in poor trading between January 2014 and November 2014.

“Fred Elm told investors the Elm Tree Funds would generate huge profits from investments in privately held technology companies,” Audrey Strauss, the acting US Attorney for the SDNY, said in a statement. “In fact, the Elm Tree Funds never invested in these pre-IPO companies and never returned a profit. Further, Elm lied to investors to conceal that their money was being comingled, misused, and lost.”

Elm pled guilty to conspiracy to commit securities fraud and securities fraud, but not before jumping bail and fleeing to Canada in June 2017, one week before he was scheduled to be in court. He was arrested in Canada and extradited to the US in January 2020. Naqvi, who pled guilty to one count of securities fraud conspiracy, also fled to Canada, where he was eventually arrested and extradited to the US in November 2019.

Elm, who was also sentenced to three years of supervised release, was ordered to forfeit more than $8.3 million and to pay restitution of more than $12.4 million.

Related Stories:

Former Cyberfraud Prevention Firm CEO Arrested for Fraud

Hedge Fund Manager Gets Nearly 12 Years in Prison for Fraud

Two Sent to Prison for $2.8 Million Investment Fraud Targeting Elderly Victims

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