CPP Investment Board Commits Half-Billion Dollars to Canadian Venture CapitalJune 19, 2002
The CPP Investment Board announced today that, with four new private equity agreements, it has committed approximately $500 million in just one year to Canadian venture capital opportunities and entrepreneurs.
"Over the next three years, these commitments should help 50 to 100 entrepreneurial Canadian enterprises to improve their chances of becoming success stories," commented Mark Weisdorf, Vice President - Private Market Investments at the CPP Investment Board. "In the past year, we have committed approximately 10 percent of the new venture capital raised in Canada. We will continue to look for venture capital partners with the experience and track record to place future CPP funds in quality growth opportunities for the benefit of all Canadians," he added.
Since June, 2001, the CPP Investment Board has committed $905 million to six Canadian private equity fund managers, of which $409 million is targeted at buyout opportunities and $497 million at venture capital opportunities.
The latest commitments are:
- $200 million, of which $100 million is to a "fund of funds" managed by EdgeStone Capital Partners of Toronto, for investments of between $5 million and $10 million in other Canadian venture funds. In addition, $100 million has been committed to a related fund that will co-invest directly in individual companies sponsored by the venture capital firms in the Fund of Funds. The CPP Investment Board has previously committed $200 million to other EdgeStone funds.
- $200 million to MDS Capital Corp. of Toronto for investment in life sciences opportunities. The CPP Investment Board has also acquired a 10% stake directly in MDS Capital Corp.
- $40 million to Skypoint Capital of Kanata investing in early stage Canadian companies that supply semiconductor and optical components, datacom equipment and software for managing and supporting networking infrastructure.
The other three previously announced Canadian private equity partners are Clairvest Group Inc., Borealis Capital Corporation, and Brascan Financial Corporation.
The CPP Investment Board has also committed $2.0 billion to U.S. private equity firms, of which $375 million is venture capital, as well as $537 million to European buyout fund managers.
"Our Canadian venture capital commitment is substantially higher than to the U.S., especially relative to market size. We are making a special effort to find the best opportunities at home before venturing too far abroad," Mr. Weisdorf commented.
The CPP Investment Board plans to invest up to 10 percent of total assets in private equity. To date, $3.5 billion has been committed to 24 limited partnerships managed by 20 private equity firms. The commitments will be drawn down for investment over the next several years. As of March 31, 2002, $458 million, or approximately 3.2% percent of the CPP Investment Board's total assets, has been invested in private equity.
The remainder of the CPP Investment Board's assets are primarily invested in funds that replicate stock indexes for Canadian, U.S. and non-North American publicly traded equities. Private equity is expected to produce higher returns than public equity over the long term.
Created in December 1997, the CPP Investment Board is a crown corporation that invests funds not needed by the Canada Pension Plan to pay current pensions. Cash flows are invested in equities to balance the bond portfolio owned by the Canada Pension Plan. By increasing the long-term value of funds, the CPP Investment Board will help the Plan to keep its pension promise to Canadians. Located in Toronto, the CPP Investment Board is governed and managed independently of the Canada Pension Plan and at arm's length from governments.
For further information contact:
Vice President - Private Market Investments