The Canada Pension Plan Investment Board saw its net investment return for the fiscal year ended March 31, 2016 drop to 3.4 per cent, a decline of nearly 15 percentage points since last year’s return of 18.3 per cent, and the lowest return since 2009’s -18.6 per cent.
However, Canada’s largest pension fund ended the fiscal year with net assets of $278.9 billion, compared to $264.6 billion at March 31, 2015. The $14.3 billion increase in assets consisted of $9.1 billion in net investment income after all CPPIB costs and $5.2 billion in net CPP contributions.
“Over the past twelve months, despite one of the more challenging investment environments in recent years and predominately negative equity markets, the CPP Fund generated a moderate gain,” said Mark Wiseman, president and chief executive officer of CPPIB, in a news release on Wednesday.
“This outcome demonstrates the benefits of a resilient, highly diversified global portfolio. This year’s results highlight the real-time impact of short-term market volatility, reinforcing why we focus on long-term results.”
Despite volatility in quarterly results, CPPIB credits its $9.1-billion gain in net investment income to private equity assets and real estate and fixed-income holdings. And though the Canadian dollar’s currency dropped during the fiscal year, the pension fund’s diversification across currencies helped bring in returns, it said.
The fund’s portfolio is made up of 19.1 per cent of Canadian assets and 80.9 per cent of foreign assets.
CPPIB’s investment highlights for the fiscal year ended March 31, 2016 include:
- A joint acquisition of Petco with CVC Capital Partners for a total of US$4.6 billion.
- A signed agreement alongside the Ontario Municipal Employees Retirement System and the Ontario Teachers’ Pension Plan to acquire Skyway Concession Company for a total of US$2.9 billion.
- A $1-billion commitment for energy infrastructure acquisitions in Western Canada through a partnership with Wolf Infrastructure Inc.
- A completed acquisition of Antares Capital, alongside Antares Investment Management Inc., from GE Capital, valued at US$12 billion.
- An RMB3.2-billion ($688 million) investment in the common equity of Postal Savings Bank of China.
- An acquisition of 52.9 million common shares of Entertainment One Ltd. for £142.4 million.
- A $756-million investment for an approximate 27.7 per cent interest in Enstar Group Ltd., a global specialty insurance company.
Real estate investments
- A joint venture with Welltower Inc. to purchase a 97.5 per cent interest in a portfolio of six seniors housing properties in Florida for an aggregate price of US$555 million.
- A student housing joint venture entity with GIC and The Scion Group LLC to acquire a student housing portfolio in the U.S. for a total of US$1.4 billion.
- A commitment of an additional US$1 billion to the Goodman China Logistics Partnership,established with Goodman Group in 2009 to own and develop logistics assets in Mainland China.
- A strategic joint venture with Unibail-Rodamco, the second largest retail REIT in the world, to grow CPPIB’s German retail real estate program. The joint venture was formed through its initial equity investment of €394 million. In addition, CPPIB has committed a further €366 million in support of Unibail-Rodamco Germany’s investment strategies.
- The acquisition of a stake of approximately 20 per cent in Homeplus, Tesco’s South Korean business, for US$534 million, as part of a consortium led by MBK Partners.
- The sale of 45 per cent interest in two Florida assets, Oakwood Plaza shopping centre and Dania Pointe development project. CPPIB received approximately US$91.3 million from the sale.
- The Capital London Fund, in which CPPIB is an 80 per cent equity holder, sold an office building in London. Proceeds to CPPIB from the sale were approximately £150 million.
- The sale of a 45 per cent indirect stake in a Midtown Manhattan office building. Proceeds to CPPIB from the sale were approximately US$79 million.