This post is about the investment strategy of CPPIB. In addition, it offers a discussion of the risks and challenges that CPPIB’s investment strategy poses. The post will also provide a detailed explanation about how CPPIB recruits and retains its investment staff.
Does CPPIB have a clear investment strategy? How would you characterize it?
How does CPPIB expect to save money by investing directly versus investing in
Funds of funds ? How much better would the private equity returns need to be in
order to justify the fees?
Assume the following:
Investment $ 1000 over 3 years. 1/3 of fund in each year
Return multiple : 2.5X for direct and 3.6 for Fund of funds
Fees for direct : 1.5% annually
Fees for PE funds: 1.5% annually and 20% of gains
Funds of Funds 1% annually and 5% of gains
Discount rate: 15%
If you were another LP in a fund with CPPIB and you saw CPPIB investing directly
alongside the General Partner (GP ), How would you react?
What risks and challenges does CPPIB’s investment strategy pose? How might it
backfire? How does CPPIB recruit and retain its investment staff? What challenges
does it face?