PSP Investments private assets drive 2019 growth

11 June 2019 - 12:00 am UTC

The Public Sector Pension Investment (PSP Investments) Board reported CAD 168bn (USD 126.6bn) of net assets under management for the fiscal year ended 31 March 2019, which is up 9.7% from the prior year, according to an 11 June press release.

The portfolio’s one-year net returns recorded 7.1%, generating CAD 11.7bn in income.

While fiscal year 2019 was impacted by higher volatility in public markets, the fund benefited from its strategy of diversification across public and private asset classes, said Neil P. Cunningham, president and CEO of PSP Investments.

As public markets returned 4.6% for the year, private market investments outperformed, including private equity, which returned 16.1%, private debt, which recorded 9.2%, and infrastructure with a return of 7.1%.

PSP’s infrastructure allocation had CAD 16.8bn of net assets under management as of 31 March 2019, up CAD 1.8bn from the prior fiscal year and constituting about 10% of the total fund.

The portfolio generated CAD 1.1bn in income, driving a 7.1% one-year return and a five-year return of 12.7%, compared to customized benchmarks of 4.6% and 6.7%, respectively.

Executives attributed the growth primarily to investments in the transportation and utilities sectors in Europe and North America. 

The group deployed CAD 1.7bn in direct and co-investments mostly throughout Europe and the US during the year. It also disposed of a total of CAD 600m of non-strategic investments. 

Key investments included the acquisition of a majority interest in Forth Ports, the third-largest port operator by volume in the UK that owns and operates eight commercial ports.

Roadis, PSP’s road platform, which acquired a controlling interest in two roads located in Portugal, is also considered to be a key investment. 

The portfolio has recently seen increased exposure to the US market and decreased exposure to Europe, Asia, and Oceania, although the fund didn’t offer further explanations on the change.

The portfolio has 35.2% exposure to Europe, 28.5% to emerging markets, 27% to the US, 5.3% to Canada and 4% to Asia and Oceania.

PSP Investments’ allocation is spread across industrials (46.5%), utilities (38.6%), communications (10%), energy (3.1%) and technology (1.8%).

Infrastructure is part of the group’s real assets portfolio, which also houses real estate and natural resources.

 

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