The Canada Pension Plan fund’s net assets increased to $300.5 billion in the quarter ended Sept. 30, 2016 compared to $287.3 billion at the end of the previous quarter, according to the Canada Pension Plan Investment Board.
For the six-month fiscal year-to-date period, the CPP fund increased by $21.6 billion, from $278.9 billion at March 31, 2016. This included $17.7 billion in net investment income after all CPPIB costs and $3.9 billion in net CPP contributions. The portfolio delivered a gross investment return of 6.4 per cent for this period.
According to Mark Machin, president and chief executive officer of the CPPIB, all investment departments contributed to the fund’s overall performance during the quarter with solid gains across public and private markets. “Longer-term returns demonstrate the prudence of our disciplined investment strategy to help sustain the fund over multiple generations,” he said in a news release.
In the CPP fund’s triennial review released in September 2016, the chief actuary of Canada reaffirmed that, as at Dec. 31, 2015, the CPP remains sustainable at the current contribution rate of 9.9 per cent throughout the forward-looking 75-year period covered by his report.
His report also indicated that CPP contributions are expected to exceed annual benefit payments until 2021, after which a small portion of the investment income from CPPIB will be needed to help pay pensions.
“Over the period of his latest report, the chief actuary confirmed that the fund’s performance is well ahead of projections as investment income was 248 per cent higher than anticipated,” said Machin. “The fund’s investment returns have made a favourable impact and contributed to the lowering of the minimum contribution rate required to help keep the CPP sustainable over the long term.”
The report also included investment highlights for the quarter:
- The completion of a follow-on investment of $250 million in Kotak Mahindra Bank in India for an additional 0.9 per cent stake.
- The investment of US$280 million in convertible preferred equity securities of a parent company of Advanced Disposal Services, Inc. in Florida.
- The announcement of a combined investment of US$500 million with TPG Capital for a minority stake of 17 per cent in MISA Investments Ltd., the parent company of Viking Cruises.
- The signing of an agreement with American International Group to acquire 100 per cent of London, England-based Ascot Underwriting Holdings Ltd. and certain related entities, together with Ascot’s management, for a total consideration of US$1.1 billion.
- An equity investment into Wolf Midstream Inc. to support Wolf’s acquisition of a 50 per cent ownership interest in Access Pipeline in Northeastern Alberta from Devon Energy Corp.
- The acquisition of a 50 per cent interest in a portfolio of office properties in downtown Toronto and Calgary at a gross purchase price of $1.175 billion from Oxford Properties Group.
- The completed acquisition of a 33 per cent stake in Australian rail freight service provider Pacific National for approximately A$1.7 billion, as part of the consortium that acquired Asciano Ltd.
- The completed follow-on investments totalling C$190 million in Aliansce Shopping Centers S.A., one of the largest owners, operators and developers of shopping centres in Brazil.