August 11, 2010 / 12:52 PM / 7 years ago

UPDATE 1-CPPIB assets rise but investment value shrinks

* Ends fiscal first quarter at C$129.7 billion

* C$2.1 bln increase in assets due to contributions

* Says rise offset by C$1.7 bln drop in investment value

TORONTO, Aug 11 (Reuters) - Canada Pension Plan Investment Board, the manager of the country's national pension fund, said on Wednesday assets under management edged up in its latest quarter as contributions offset negative investment returns.

For the fiscal quarter ended June 30, Toronto-based CPPIB's net assets rose to C$129.7 billion, helped by C$3.8 billion in contributions.

Those gains were offset by a C$1.7 billion decline in the value of its investments during a period of turbulence on global equity markets.

"This was a challenging quarter for public equity markets around the world, many of which experienced double-digit declines," said David Denison, president and chief executive of the CPP Investment Board.

"This was also a quarter where the CPP Fund benefited from diversification into private equity, real estate, infrastructure and private debt holdings."

Assets under management are now about three times the value in 2000, when CPPIB was 93 percent invested in bonds and before it adopted an active investing policy.

Assets rose 23 percent from March 2009, at the trough of the global financial meltdown, when assets under management amounted to about C$105.5 billion.

CPPIB was involved in at least three major transactions in the fiscal first quarter, including the purchase of ownership stakes in a Manhattan skyscraper and the C$250 million purchase of a 17.1 percent stake in Laricina Energy Ltd, a closely held Calgary-based oil sands company.

Together with a Canadian partner, CPPIB is also in the process of buying Tomkins Plc TOMK.L, the British maker of car parts, industrial hoses and bath tubs, for $4.5 billion. If successful it will rank as the largest global private equity deal of the year.

CPPIB was involved in three of the top five global private equity deals of 2009, including the largest leveraged buyout of the year -- the $4 billion acquisition by CPPIB and U.S. private equity firm TPG [TPG.UL] of IMS Health Inc, a prescription drug sales data provider.

Deep pools of capital and long-term investment outlooks have helped Canadian pension funds become a new breed of financial investor, able to easily outmuscle buyout firms.

"We now have in place the resources and expertise to execute private asset transactions such as these most recent ones around the world," Denison said.

CPPIB said at the end of the quarter equities represented 53.9 percent of investments, or C$69.9 billion, with 40.8 percent in listed firms and 13.1 percent in private equity.

Fixed-income investments, which included bond and money market securities, represented 32.0 percent of the portfolio. The remainder included real estate and infrastructure assets and inflation-linked bonds.

($1=$1.037 Canadian)

Reporting by Pav Jordan; Editing by Frank McGurty

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