CANADA - Canada Pension Plan Investment Board (CPPIB) may bid for private equity assets including those owned by UK's Wellcome Trust Ltd. to take advantage of depressed prices, chief executive officer David Denison says.
Toronto-based Canada Pension, the nation's second-biggest public retirement fund manager, oversees C$117.4bn (US$96.1bn), including about C$15.4bn in private-equity assets. Wellcome Trust, a London-based charity that conducts biomedical research, said on 11 November it will consider selling part of a private-equity portfolio valued at £2.1bn ($3.1 billion) last year.
Investors including pension plans and endowments pumped a record $1.01bn into private equity in 2006 and 2007 in search of returns exceeding those available from public stocks and bonds. The credit shortage has limited private equity firms' ability to acquire and sell companies, crimping investment profits.
Wellcome Trust said in an email statement that taking bids for any of the charity's private equity portfolio "is a normal part of the overall management". A spokeswoman for the trust declined to comment further.
Harvard University, the world's richest school with an endowment of $36.9bn on 30 June, has talked with investors about selling some of its private equity investments, a person familiar with the matter said last week. Harvard, in Cambridge, Massachusetts, is seeking to sell about $1.5bn in partnerships managed by companies including Bain Capital LLC.
Private equity returned 8.2% in CPPIB's 2008 fiscal year, which ended 31 March, and 35% in fiscal 2007. Investments include stakes in music company EMI Group Ltd. and U.S. discounter Dollar General Corp. Canada Pension also invests in funds run by Apollo Management LP, Blackstone Group LP and Kohlberg Kravis Roberts & Co.
"We are a large fund, so we can deal with large secondary transactions that many participants couldn't envision," Denison said. "Because we are already a private equity investor, we have insights into the valuation of the companies. So when a secondary comes into the market, we have a high degree of confidence in our ability to attach a value to it."
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