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CPPIB tops $127bn

The Canadian pension bucks the loss-making trend among North American pension funds returning one percent on its investments in the three months to June this year. The pension’s real estate allocation now stands at 5.6%, or $7.2bn. Infrastructure makes up 2.6%, or $3.3bn, of its portfolio.

The Canada Pension Plan Investment Board has seen its assets grow by $5 billion during the three months to June this year thanks in part to higher commodity prices and energy stocks. Despite pension plans across the US reporting losses owing to declining equities markets, CPPIB has seen returns on its investments rise by one percent pushing the total value of the fund to $127.7 billion (€86.3 billion).

According to the pension, the $5 billion increase was made up of $1.3 billion in investment income, equivalent to a one percent IRR, and $3.8 billion in pension contributions not directed to current pension beneficiaries.

It means real estate as a percentage of the pension’s overall portfolio now stands at 5.6 percent – up from 4.6 percent in the year to June 2007. CPPIB president and chief executive David Denison said in a statement, Canadian equity markets had risen 8.6 percent owing to higher commodity prices and energy stocks offsetting a 3.4 percent decline in other markets due to the continuing credit dislocation.

Equities comprised 62 percent, or $79.2 billion, of the fund as of the end of the first quarter for the fiscal year 2009 (June 30, 2008), with 51 percent focused on public equities and 11 percent on private equities. Fixed income totaled 25.8 percent, or $32.9 billion, of the plan.

Meanwhile real estate totaled 5.6 percent, or $7.2 billion in value, and infrastructure accounted for 2.6 percent of the pension’s portfolio, with a value of $3.3 billion.

The California State Teachers' Retirement System (CalSTRS) and neighboring pension, California Public Employees’ Retirement System, both recently reported losses on investments of 3.7 percent and 2.4 percent respectively, despite healthy returns from real estate. Yesterday, Florida Retirement System pension fund reported an overall loss on investments of 4.4 percent, even though real estate returned 8.69 percent. The benchmark for the asset class was 10.13 percent, a spokesman told PERE.

CPPIB has been increasingly active in the infrastructure space, in March it attempted to acquire a minority stake in Auckland International Airport, in a deal worth an estimated C$1.4 billion ($1.4 billion; €907 million). However that deal was ultimately blocked by New Zealand authorities.

In Europe, the Canadian pension has opened an office in London to target deals in the infrastructure, private equity and real estate asset classes. Former Goldman Sachs deal-maker Alain Carrier heads the pension’s private equity and infrastructure activities in London. It follows CPPIB’s opening of a Hong Kong office in February.