CPPIB records huge private equity NAV gains

$2 billion in NAV growth over a 12 month period isn’t shabby, even if it’s a product of fair market value accounting.

It is always worth digging into the stats at the CPP Investment Board. Based upon the June 30, 2010 figures, our private equity investments are doing extremely well according to the CPPIB’s external fund managers and their accountants (see prior post “CPPIB U.S.A. general partner Q2 2010 performance numbers” Dec 12-10).

The overview (June 2009 quarter in brackets, using currency exchange rates for each quarter end date):

Paid in Capital: $17.588 billion ($16.984B)
Reported Value: $12.8 billion ($10.3B)
Distributions Received: $7.773 billion ($7.6B)
Reported Value plus Distributions: $20.565 billion ($17.917B)

Capital Calls still to fund: $11.603 billion ($15.679B)
Total Committed: $29.191 billion ($32.663B)

If you are wondering why the unfunded commitments shrank so dramatically, the answer is simply currency moves. In June 2009, the C$ was at 1.1625 to the USD, and we had US$17.476 billion in U.S.-denominated private equity commitments. As at June 2010, the Canadian dollar had rallied to 1.06, and our U.S. dollar commitments had grown a snick to US$17.656 billion. With the cheaper U.S. buck, it is certainly easier to fund our remaining liabilities; which is great except for the fact that our previous investments of US$8.9B (the amount we had drawn by U.S. PE funds as of June 2009) are worth about 10% less (before any M-T-M valuation changes).

The Euro slip was even more dramatic. We had C$10.026 billion of fund commitments in June 2009, and the 1.63 exchange rate is now 1.30.

All told, and despite the currency hits, we’re up almost $2 billion on the entire PE portfolio based on mark-to-market Net Asset Value (NAV) growth. That’s an 18% move by the private market portfolio (backing out the increased paid-in-capital during the period), even though the S&P 500 rose just 12% over the same time period. And here you thought GAAP FMV in PE Land was solely tied to public market comps! It would appear that CPPIB’s 100+ PE fund managers are recovering far better than the overall market.

MRM