CPPIB and Northleaf Get a Little Closer

The Canada Pension Plan Investment Board (CPPIB) and private equity manager Northleaf Capital Partners strengthened their bond even more in the waning days of January, announcing a brand-new CAN$330M commitment to the asset class.

“This is the continuation of what has been a successful and long-standing relationship,” says Jeff Pentland, a managing director at Northleaf. “We are delighted to have their [CPPIB’s] support and confidence in our team.”

This relationship goes back nearly 10 years and brings CPPIB’s total commitments to Northleaf for Canadian private equity management to CAN$1.2B, including a CAN$70M investment in the Northleaf Venture Catalyst Fund as recently as last year.

While Northleaf has a global presence, with locations in the United Kingdom and the United States, it was the firm’s Canadian ties that helped to solidify the relationship with CPPIB.

“We are their partner for the home market,” Pentland explains.

The investment mandate calls for Northleaf to put CPPIB’s capital to work on Canadian small and midsized buyout and growth-equity funds that are seeking to raise $1B or less in commitments. The fund-of-funds program is mostly sector-agnostic, Pentland says. There will be a 12-year fund term for this vehicle, with a four-year investment period.

Although Northleaf has not made an investment for the new fund yet, given the deal was recently agreed to, the firm is actively seeking opportunities as it rolls out the plan. Pentland estimates between eight and 10 funds will be included in the portfolio when all is said and done.

CPPIB is one of the most active private equity investors in the Canadian market. Total commitments from the pension are CAN$4.1B, going to Canadian private equity and venture capital investments, including fund managers and direct investments. As of September 30, 2014, total value of CPPIB assets under management were CAN$234.4B on behalf of 18 million members, according to the pension.

Northleaf currently has more than CAN$6B in commitments under management on behalf of a variety of clients, including public, corporate, and multi-employer pension plans, university endowments, foundations, financial institutions, and family offices. The firm’s 65-person team currently manages six global private equity funds, a private equity secondary fund, a direct infrastructure vehicle and a number of customized mandates from locations in Toronto, London, and Menlo Park, California.

“This relationship has worked well for both sides,” says Pentland, who declined to disclose specifics regarding returns. “They [CPPIB] have confidence in our track record.”