The Canada Pension Plan Investment Board (CPPIB) is to begin making investments in CLOs through a partnership with Sound Point Capital Management.
The partnership will see CPPIB Credit Investments invest $285 million over the next few years in an investment vehicle established to purchase equity in Sound Point’s CLOs.
CPPIB said historical performance of CLO equity tranches has been favourable compared to subordinated tranches of other structured credit asset classes. It added that CLOs will help diversify its portfolio to pursue better risk-adjusted returns compared to traditional fixed income and equities.
CPPIB Credit Investments has a portfolio of $25.6 billion in assets spread across investments in North America, Latin America, Europe and the Asia Pacific in structured credit, leveraged finance, public credit, real asset credit and intellectual property.
New York-based Sound Point Capital Management has $19 billion of assets under management including CLOs, leveraged loans and stressed and distressed credit.
CPPIB has made a number of changes to its investment team in recent years and in April promoted its head of private debt, John Graham, to lead its credit investment business.