NorthLeaf wins $438MM VC mandate from CPPIB

The marginalization of the Canadian Venture Capital landscape continues, unabated. The latest evidence of the industry’s multi-year decline came in the form of CPP Investment Board’s decision to spin out all of their direct Canadian VC relationships to NorthLeaf Capital Partners. The move, which took place between April and June, became public today with the release of the CPPIB’s quarterly financial report. According to the June 2010 list of external funds that call CPPIB a limited partner, the following names no longer appear, all of which were posted as of March 31/10:

Celtic House VP Fund II (2002 US$13.5MM commitment)

Celtic House VP Fund III (2005 US$50MM commitment)

Edgestone Venture Fund (2001 C$50MM commitment)

Edgestone Venture Fund II (2004 C$50MM commitment)

Lumira/MDS Life Sciences Technology Fund II (2002 $200MM commitment)

Skypoint Telecom Fund II (2001 US$25MM commitment)

Ventures West 8 (2004 C$50MM commitment)

As of today, all that data has been wiped away. No longer will be able to easily discern how well we were doing on these investments. The entire $438 million package of GPs has been shipped over to NorthLeaf Capital Partners, and is now comingled with the old $82 million “Northleaf/CFOF Canadian Legacy VC Holdings LP”. According to today’s release, Legacy VC Holding LP’s assets have grown to $550 million during the quarter. With the removal of the individual funds above, one must assume they’ve found a new home within the NorthLeaf universe.

As a house-cleaning move, it makes plenty of sense for CPPIB. Mark Wiseman and John Breen have been clear for years that managing $25-$50 million GP relationships isn’t their business under what I’ll call the CPPIB II model. Given the established CPPIB-NorthLeaf relationship, it seems natural for Stuart Waugh et al to carry out the monitoring process involved in what are, at least in some cases, already long-in-the-tooth commitments. $438MM of new assets to manage will be a delightful addition to the NorthLeaf website.

For the Canadian VC firms involved, nothing may turn on the news, unless they benefitted from having their returns published via the CPPIB website and to constantly be associated with many of the world’s largest asset managers and PE shops. In which case, it’s just another punch in the gut.

Since CPPIB’s been so adamant that they won’t “re-up” on directs of this nature, it’s probably just as well for all involved for the memories of the heyday to fade into the distance.

MRM