CPP contributions offset small loss on investments in busy deal-making quarter

TORONTO – The CPP Fund had a small investment loss in its most recent quarter but the retirement fund’s assets increased by $4 billion overall because of contributions from the Canada Pension Plan.

The Canada Pension Plan Investment Board — which manages funds that aren’t currently required to fund pension benefits —says the CPP Fund had $268.6 billion of net assets as of June 30, up from $264.6 billion a year earlier.

It received $4.2 billion in contributions from employees and employers covered by the Canada Pension Plan but that was offset by $200 million in net investment losses after costs.

It says the portfolio’s gross investment return was flat for the quarter and negative 0.1 per cent on a net basis.

That contrasted with the fund’s return for the 2014-15 financial year ended March 31, which was a record 18.3 per cent.

But CPPIB chief executive Mark Wiseman says the fund’s diverse portfolio showed resiliency at a time when benchmark stock indexes in Canada, the United States and Germany were down further.

“That portfolio should continue to perform well in choppy market conditions as we move forward,” Wiseman said Friday. “We have scale, we have certainty of assets and we obviously have a very long time horizon.”

He said the three months from April to June was a busy quarter for CPPIB which did more than 25 investments, including several that were worth more than a billion of dollars.

“From my perspective, it has been a really, really good quarter. We’ve been incredibly busy . . .and we expect that to continue.”

Among the biggest deals during the quarter was the acquisition of the Antares Capital lending operation from the financial arm of General Electric, for $12-billion.

Antares Capital’s management and about 300 employees will operate the business as a stand-alone, independent lender to private-equity sponsors, subject to regulatory approval.

CPPIB announced in May that it would invest more than $1 billion in a German real estate joint venture. That included $542 million for a 46.1 per cent interest in shopping centre operator mfi AG, and an additional $503 million to support mfi’s needs.

In April, CPPIB joined with private equity firm Permira to buy Informatica Corp. for about US$5.3 billion. The California-based company has about 5,500 employees who serve organizations with large-scale information assets.

To support its investment activity, subsidiary CPPIB Capital Inc. placed $1 billion worth of five-year notes and the fund manager sold some assets, including US$1.16 billion in cash and notes for a stake in U.S. cable operator Suddenlink.