Canada Pension Plan Investment Board makes two investments, one exit in India in Q3 FY23

Toronto-based investment management firm Canada Pension Plan Investment Board (CPP Investments) has made capital allocation decisions to back IIFL Wealth and IndoSpace’s new real estate fund, and exercised an exit from L&T Infrastructure Development Projects Limited (L&T IDPL) in the third quarter of fiscal 2023 in India. 

During the quarter, CPP Investments made an investment of $53 million for a 2.7 per cent stake in IIFL Wealth, a wealth and asset management firm in India, alongside Bain Capital Asia. Bain Capital had acquired 24.98 per cent stake in IIFL Wealth for $485.6 million in April 2022. 

The company also made an investment commitment of $205 million to IndoSpace Logistics Park IV (ILP IV), a real estate vehicle managed by real estate company IndoSpace. CPP Investments was an anchor investor in the Everstone-backed company’s fourth development vehicle, which targets $600 million of total equity commitments. The Canadian fund had previously partnered with IndoSpace on Core, which is a real estate core fund and also invested in its third real estate fund. Following the investment in ILP IV, the partnership will exceed $1 billion in assets. 

CPP Investments' only exit in the country during the quarter was from L&T Infrastructure Development Projects Limited (L&T IDPL). The company agreed to sell 49 per cent stake in L&T IDPL, gross proceeds from which are expected to be approximately C$220 million, before closing adjustments and other terms of the transaction. CPP Investments initially invested into L&T IDPL in 2014 and has continued to be an active investor to India’s infrastructure sector, including into IndInfravit. 

CPP Investments is an investment management organization that manages the ‘Fund’, an investment vehicle consisting of the 21 million contributors and beneficiaries of the Canada Pension Plan. It has a diversified portfolio of assets with investments around the world in public equities, private equities, real estate, infrastructure and fixed income. 

The company ended the third quarter of fiscal 2023 on December 31, 2022 with net assets of $536 billion, compared to $529 billion at the end of the previous quarter. The $7 billion increase in net assets for the quarter consisted of $10 billion in net income less $3 billion in net Canada Pension Plan (CPP) outflows.

The Fund, which includes the combination of the base CPP and additional CPP accounts, achieved five-year and 10-year annualized net returns of 8.1 per cent and 10 per cent, respectively. For the quarter, the Fund’s net return was 1.9 per cent.

CPP Investments routinely receives more CPP contributions than required to pay benefits during the first part of the calendar year, partially offset by benefit payments exceeding contributions in the final months of the year. 

As per the company, in the five-year period up to and including the third quarter of fiscal 2023, CPP Investments has contributed $166 billion in cumulative net income to the Fund, and over a 10-year period, it has contributed $308 billion to the Fund on a net basis. 

“Our diversified portfolio delivered gains this quarter due to a rebound in public equity markets, while our private asset values remained relatively flat. Despite the enduring global economic headwinds, our active management strategy enabled us to outperform markets over the first nine months of our fiscal year,” said John Graham, President and CEO. “While we expect these market pressures to persist in 2023, our resilient portfolio continues to deliver strong, long-term results,” he added. 

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