TORONTO (Reuters) - Canada Pension Plan Investment Board, one of the world’s top private equity and infrastructure investors, is well positioned to acquire European assets sold off by banks struggling to shore up their balance sheets, its chief executive said on Friday.
Speaking to Reuters after the CPPIB reported rising assets under management in the third quarter ended December 31, CEO David Denison said the European debt crisis is still the big question mark hanging over the global economy.
“What we are seeing is a number of opportunities come out of the banking system in Europe as the banks are starting to address their capital issues, in part by selling assets that are on their balance sheets,” said Denison. “We see them anxious to divest those.”
Since the 2008-09 financial crisis, CPPIB has made massive infrastructure and private equity investments as many of its competitors retreated.
CPPIB, which invests on behalf of 17 million beneficiaries of Canada’s national pension plan, participated in the second-largest private equity transaction of 2011, the C$6.2 billion ($6.2 billion) acquisition of Kinetic Concepts, a U.S. maker of medical devices used in wound care.
The joint deal with private equity firm Apax Partners and PSP Investments - which manages investments for pension funds of the Royal Canadian Mounted Police - was just one of a long list of investments announced or completed in the latest quarter. It marked the third consecutive year that CPPIB has participated in one of the world’s largest deals.
The overall asset mix at CPPIB as of December 31 was 50.7 percent equities, 31.6 percent fixed income - either bonds, money market securities, other debt and debt financing liabilities - and 17.7 percent inflation-sensitive assets such as real estate and infrastructure.
CPPIB has slowly boosted its exposure to private equity investments, which accounted for 16.3 percent of its holdings at the end of the third quarter.
“We expect in all likelihood to have more private equity as we look ahead to 2012, certainly more real estate and more infrastructure as well,” said Denison.
The slim quarter-to-quarter rise in assets under management in the three months to December 31 reflected gains in public equity and bond markets.
Assets under management in the quarter inched ahead to C$152.8 billion from C$152.3 billion at the end of the second quarter. The year-over-year gain was more substantial. At the end of the third quarter last year, net assets amounted to C$140.1 billion.
The fund plans to raise assets under management to about a trillion dollars by 2050.
Reporting By Pav Jordan; Editing by Frank McGurty and Rob Wilson