Final close of CVC Strategic Opportunities II at €4.6 billion, surpassing its target

Latest fundraising continues the successful track record for the platform, with CVC Strategic Opportunities I having secured commitments of €3.9 billion

CVC Capital Partners is pleased to announce the final close of CVC Strategic Opportunities II (“SO II”) with total commitments of €4.6 billion, surpassing the target of €4 billion.

SO II’s global investor base, made up of sovereign wealth, public and private pension funds, financial institutions, foundations, endowments and family offices, diversifies the platform’s overall investor mix and reflects the growing appetite for this type of longer life vehicle.

The Strategic Opportunities platform invests in long-term capital appreciation opportunities across Western Europe and North America which fall outside CVC’s traditional private equity strategies. The platform seeks out stable opportunities with attractive risk-reward profiles which require a longer term outlook to unlock growth. Since 2016, €3.6 billion has been committed by the platform in seven opportunities, the latest of which, GEMS Education, the world’s largest provider of private K-12 education by revenue, was announced last week.

Lorne Somerville, Co-Head CVC Strategic Opportunities said: “We are delighted to have closed CVC Strategic Opportunities II. We continue to believe this is an attractive and growing market, a belief that is clearly shared by our investors, given the success of this capital raising with a closing well above the €4 billion target.”

Jan Reinier Voûte, Co-Head CVC Strategic Opportunities added: “The Strategic Opportunities platform invests in high-quality businesses with longer growth horizons. Often this is done in partnership with families or foundations who are seeking additional capital and support from CVC’s global investment platform to take their businesses to the next stage of development. SO II will allow us to continue to support great companies with these resources.”

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GP Bullhound Fund IV holds final close at EUR113m

Gp Bullhound

GP Bullhound Fund IV holds final close at EUR113m
GP Bullhound Fund IV holds its final close at EUR113 million, continuing its successful strategy of investing in some of the best technology entrepreneurs, with a focus on growth stage businesses in the Software, Entertainment, Marketplaces and Fintech sectors. Recent investments include Slack, Klarna, Tradeshift, Glovo and LendInvest.

In addition to independent deal sourcing, the fund benefits from a unique deal flow through GP Bullhound’s merchant bank organisation with 110 professionals across nine offices on three continents.

“We are passionate about backing great technology entrepreneurs and this oversubscribed final close allows us to commit more capital to the best of the best”, commented Per Roman, Co-Founder and Head of Asset Management at GP Bullhound, acting as exclusive investment advisors to the Fund.

Joakim Dal, Partner at GP Bullhound Asset Management and Ben Prade, Head of Investor Relations, added: ”We highly value the trust of our existing and new LPs, institutions, entrepreneurs and family offices. Leveraging GP Bullhound’s global network, industry intelligence and strategic knowledge, we continue on our mission to support and invest in extraordinary entrepreneurs.”

Enquiries
For enquiries, please contact:
Per Roman, Managing Partner, at per.roman@gpbullhound.com
Joakim Dal, Partner, at joakim.dal@gpbullhound.com
Ben Prade, Head of Investor Relations, at ben.prade@gpbullhound.com

About GP Bullhound
GP Bullhound is a leading technology advisory and investment firm, providing transaction advice and capital to the world’s best entrepreneurs and founders. Founded in 1999, the firm today has offices in London, San Francisco, Stockholm, Berlin, Manchester, Paris, Hong Kong, Madrid and New York. For more information, please visit www.gpbullhound.com.

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Auctus Capital Partners, H2 Equity Partners and Sherpa Capital create Optimum Alliance

Auctus

Optimum Alliance is a new network of high performing mid-market investors in Europe. The Alliance covers key European private equity markets and consists of partners with a proven track-record of value creation and facilitates accelerating European rollouts and privileged access to scarce resources in deal origination and transactions.

The objective of the Optimum Alliance is to create a platform of independent – high performing – firms that can share best-practises, investment experiences, cooperate on deal situations as and when appropriate and allow co-investment.

Portfolio companies of Optimum Alliance members benefit from “local access” to the extensive networks of the Alliance’ members. Many of our portfolio companies have extensive export operations or are looking to expand cross-border. Facilitating this and supporting our management teams has been one of the key drivers for the establishment of the Optimum Alliance.

As we strengthen our cooperation, we will look to gradually expand the Optimum Alliance with relevant new members – that do not compete with any of the existing members – and share our focus on our market segment and proven out-performance.

The founding partners of Optimum Alliance are:

  • Auctus Capital Partners – a German mid-market private equity firm focusing on buy & build investments in the DACH area
  • Sherpa Capital – a Madrid based mid-market private equity firm focusing on distressed and underperforming companies in Spain and Portugal
  • and H2 Equity Partners – a leading hands-on mid-market private equity firm focused on the UK, Ireland and the Benelux

The founding partners believe that there is a significant value add in creating the Optimum Alliance and are excited to build the alliance and remain at the forefront of high-return private equity investing.

For more information about the Optimum Alliance and its founding partners please refer to:
www.optimum-alliance.com
www.h2ep.co.uk
www.sherpacapital.es
www.auctus.com

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Marlin Announces Strategic Minority Investment by Blackstone

Marlin

LOS ANGELES and LONDON, May 16, 2019 – Marlin Equity Partners, a global investment firm, today announced that Blackstone’s (NYSE: BX) Strategic Capital Group has made a passive, minority investment in the firm.

Blackstone’s Strategic Capital Group is part of Blackstone Alternative Asset Management (BAAM) and specializes in minority partnerships with leading alternative asset managers. This investment will allow Marlin to continue to invest in and further expand its global investment platform, strengthen the commitment to and alignment with its diversified investor base, and leverage the global resources and capabilities of Blackstone.

Since its inception in 2005, Marlin has rapidly grown to become a leading global investment firm with over $6.7 billion of capital under management and completed more than 140 transactions across its core targeted industries, including software, technology, healthcare IT, tech-enabled services and industrial technology.

“This investment by Blackstone further validates the best-in-class organization we have built and the true value proposition of our relationship-driven approach to investing,” said David McGovern, Founder and CEO of Marlin. “We are excited to welcome Blackstone as a strategic partner, and look forward to leveraging their expertise and extensive breadth of resources to continue to invest in and position our global platform for long-term success.”

“Marlin’s approach to investing places a heavy focus on partnering with management teams to support businesses, enhance operations and accelerate growth,” said Scott Soussa, Head of BAAM’s Strategic Capital Group. “This emphasis on long-term value creation across its underlying companies positions Marlin for continued success and we are excited to partner with them.”

Terms of the transaction were not disclosed.

Evercore acted as financial advisor to Marlin Equity. Kirkland & Ellis LLP served as legal counsel to Marlin Equity and Simpson Thacher & Bartlett served as legal counsel to Blackstone.

About Marlin Equity Partners
Marlin Equity Partners is a global investment firm with over $6.7 billion of capital under management. The firm is focused on providing corporate parents, shareholders and other stakeholders with tailored solutions that meet their business and liquidity needs. Marlin invests in businesses across multiple industries where its capital base, industry relationships and extensive network of operational resources significantly strengthen a company’s outlook and enhance value. Since its inception, Marlin, through its group of funds and related companies, has successfully completed over 140 acquisitions. The firm is headquartered in Los Angeles, California with an additional office in London. For more information, please visit www.marlinequity.com.

About Blackstone Alternative Asset Management
Blackstone Alternative Asset Management (BAAM®), Blackstone’s Hedge Fund Solutions platform, is the world’s largest discretionary investor in hedge funds, with approximately $80 billion in assets under management. BAAM manages a diversified set of businesses including a customized solutions business, a special situations platform, a hedge fund seeding business, an open-ended mutual fund platform and a business that purchases stakes in established alternative asset managers. In all of BAAM’s business lines, it carefully selects and partners with fund managers across a variety of asset classes and strategies to create solutions for its investors. Through its sharp focus on clients’ goals, a rigorous due-diligence process and access to Blackstone’s global insights, BAAM strives to generate attractive risk-adjusted returns across market cycles while preserving capital during stressed market environments.

Media Inquiries
Marlin Equity Partners
Peter Spasov
Phone: +1 310-364-0100
Email: pspasov@marlinequity.com

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KKR Prices €650,000,000 of Senior Notes

KKR

NEW YORK–(BUSINESS WIRE)–May 15, 2019– KKR & Co. Inc. (“KKR”) (NYSE:KKR) today announced that it has priced an offering of €650,000,000 aggregate principal amount of its 1.625% Senior Notes due 2029 (the “notes”) issued by KKR Group Finance Co.V LLC, its indirect subsidiary. The notes are to be fully and unconditionally guaranteed by KKR & Co. Inc. and its subsidiaries, KKR Management Holdings L.P., KKR Fund Holdings L.P. and KKR International Holdings L.P. KKR intends to use the net proceeds from the sale of the notes for general corporate purposes, including to fund potential acquisitions and investments in Europe.

The notes were offered to buyers outside the United States pursuant to Regulation S and to qualified institutional buyers in the United States pursuant to Rule 144A under the Securities Act of 1933, as amended (the “Securities Act”).

The notes have not been registered under the Securities Act or any state securities laws and may not be offered or sold in the United States absent registration or an applicable exemption from the registration requirements of the Securities Act and applicable state laws.

This press release shall not constitute an offer to sell or a solicitation of an offer to purchase the notes or any other securities, and shall not constitute an offer, solicitation or sale in any state or jurisdiction in which such an offer, solicitation or sale would be unlawful. This press release is being issued pursuant to and in accordance with Rule 135c under the Securities Act.

CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING STATEMENTS

This release contains certain forward-looking statements. Forward-looking statements relate to expectations, estimates, beliefs, projections, future plans and strategies, anticipated events or trends and similar expressions concerning matters that are not historical facts. The forward-looking statements are based on KKR’s beliefs, assumptions and expectations, taking into account all information currently available to it. These beliefs, assumptions and expectations can change as a result of many possible events or factors, not all of which are known to KKR or are within its control. If a change occurs, KKR’s business, financial condition, liquidity and results of operations, including but not limited to dividends, tax assets, tax liabilities, assets under management, fee paying assets under management, capital invested, syndicated capital, uncalled commitments, after-tax distributable earnings, fee related earnings, segment EBITDA, core interest expense, cash and short-term investments, book value, and return on equity may vary materially from those expressed in the forward-looking statements. The following factors, among others, could cause actual results to vary from the forward-looking statements: whether KKR realizes all or any of the anticipated benefits from converting to a corporation and the timing of realizing such benefits; whether there are increased or unforeseen costs associated with the conversion, including any adverse change in tax law; the volatility of the capital markets; failure to realize the benefits of or changes in KKR’s business strategies including the ability to realize the anticipated synergies from acquisitions, strategic partnerships or other transactions; availability, terms and deployment of capital; availability of qualified personnel and expense of recruiting and retaining such personnel; changes in the asset management industry, interest rates or the general economy; underperformance of KKR’s investments and decreased ability to raise funds; and the degree and nature of KKR’s competition. All forward-looking statements speak only as of the date hereof. KKR does not undertake any obligation to update any forward-looking statements to reflect circumstances or events that occur after the date on which such statements were made except as required by law. In addition, KKR’s business strategy is focused on the long-term and financial results are subject to significant volatility. Additional information about factors affecting KKR can be found in KKR & Co. Inc.’s Annual Report on Form 10-K for the fiscal year ended December 31, 2018, filed with the SEC on February 15, 2019, and other filings with the SEC, which are available at www.sec.gov.

Source: KKR & Co. Inc.

Investor Relations:
Craig Larson
Tel: +1 (877) 610-4910 (U.S.) / +1 (212) 230-9410
investor-relations@kkr.com

Media Contact:
Kristi Huller or Cara Major
Tel: + 1 (212) 750-8300
media@kkr.com

 

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Cinven raises €10 billion for the Seventh Cinven Fund

Cinven

International private equity firm Cinven announces the close of the Seventh Cinven Fund (‘the Fund’) at its hard cap of €10 billion (c. US$11 billion)

Key highlights:

  • The Fund reached its hard cap in less than four months and was oversubscribed; follows successful fundraise for the Sixth Cinven Fund, which reached its hard cap of €7 billion in four months in 2016;
  • Significant support from longstanding investors, with a very high re-up rate;
  • Diversified investor base comprised of more than 180 investors representing more than 30 countries globally;
  • Reflects Cinven’s strong fund performance, with c. €11 billion of realised value in the last three years; and
  • Consistent investment strategy focused on European buyouts and selective North American investments.

Throughout its c. 30 year track record, Cinven has focused on building world class companies using its European focus and sector expertise. Cinven targets companies in which it can drive strategic growth and operational improvement, both in Europe and globally. Its functional specialists – the global Portfolio and Capital Markets teams – work closely with Cinven’s Sector and Regional teams to implement Cinven’s value creation strategies, resulting in revenue and profit growth both organically and through buy and build.

Alexandra Hess, a Partner of Cinven and Head of Investor Relations, said:

“It is a significant milestone for Cinven to have successfully concluded another fundraise in record time. It is testament to our longstanding investment performance through economic cycles, the strength of the Cinven team and the longstanding relationship Cinven has with its investors.

“Importantly, the continued partnership with existing investors, coupled with the support of select new investors, demonstrates their confidence in the Fund’s investment strategy and expertise in our defined sectors. The Cinven team views its relationship with the investors in our Fund as a partnership, and we are grateful for their support in enabling us to complete the fundraise in less than four months.”

Stuart McAlpine, Managing Partner of Cinven, added:

“We have raised a Fund that is right-sized for the market opportunity, and, through Cinven’s Sector and Regional teams, we continue to identify attractive investment opportunities that we can target to define angles and strategies to step-change growth.

“Cinven has a first class track record in internationalising businesses and executing successful buy and build strategies; as well as in creating market leaders in domestic markets and working in close partnership with management teams. We continue to invest in our team of more than 170 people; this ensures that we continue to have the platform to deliver strong and sustainable growth to investors in our Fund and their beneficiaries, both today and in the future.” 

Cinven has one of the longest standing successful European buyout track records. The Fifth Cinven Fund, a 2012 vintage fund, has generated a net Distributed:Paid-In (‘DPI’) multiple of c. 1.4x and is one of the strongest funds of its peer group.  Of the 17 investments in the Fifth Cinven Fund, nine have been fully exited at an aggregate money multiple of c. 3.2x.  Its latest fund, the Sixth Cinven Fund, has committed to 15 companies headquartered in 11 different countries to date. The unrealised portfolio of the Sixth Cinven Fund generated double-digit EBITDA growth last year. In addition, over the two most recent Funds, Cinven has completed more than 200 add-on acquisitions through its portfolio companies, reflecting Cinven’s strong buy and build capabilities.

Since January 2017, Cinven has completed seven successful exits, including the sales of CeramTec, a global manufacturer of high performance ceramics (3.2x); Medpace, a global contract research organisation (3.5x); and Ufinet Group, a leading independent fibre network operator (6.0x).

To date, Cinven has raised Funds totalling c. €37 billion and has invested in c. 135 companies across Europe and in North America. It became independent from the British Coal pension scheme in 1995 and raised its first independent Fund in 1996.

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3i European Operational Projects Fund deploys capital in Portugal, Italy, Ireland and Germany

3I

3i European Operational Projects Fund deploys capital in Portugal, Italy, Ireland and Germany

3i Group plc (“3i”) today announces that the 3i European Operational Projects Fund (“3i EOPF” or “the Fund”), has agreed to invest over €100m in four projects across Europe, taking total investment to c. 40% of the fund within a year of final close:

  • Cascais Hospital
  • MFM Capital
  • DISA Assets Limited
  • Fermoy and Limerick motorways

The Fund has acquired a 90% stake in TDHOSP – Gestao do Edificio Hospitalar, S.A., the concessionaire in charge of the design, build, financing, operation and maintenance of Cascais Hospital, a 277-bed facility located close to Lisbon. The stake was acquired from Teixeira Duarte Group, a Portuguese construction company, who will retain a minority stake. The concession was granted by the Portuguese State in 2008 with a duration of 30 years, and became operational in February 2010.

3i EOPF has also completed the acquisition of a 95% stake in MFM Capital, a portfolio holding company, from Rekeep SpA (formerly Manutencoop Facility Management). The portfolio comprises stakes in four hospitals located in Monza, Legnano, Verona and Modena, the Terza Torre office accommodation building in Bologna (in which 3i EOPF already owns a stake) and an electricity efficiency project in Alessandria.

The Fund has completed the acquisition of DISA Assets Limited, which leases a fleet of 54 new Alstom passenger trains to Abellio Rail Mitteldeutschland GmbH in Germany. DISA Assets Limited was sold by NS Financial Services, part of the Dutch railway group NS. The 14 year concession was granted by three local Public Transport Authorities and became fully operational in December 2018. This is a stable asset with an attractive yield profile and builds on 3i’s successful investments in the rail sector.

Lastly, the Fund, alongside infrastructure investor TIIC, has signed an agreement to invest in two motorway projects in the Republic of Ireland. The two projects are Fermoy, a 17.5km section of the M8 motorway between Dublin and Cork, and Limerick, a 10km section of the M7 ring road around the city of Limerick, including a 675m tunnel under the Shannon river. The concession contracts, granted by Transport Infrastructure Ireland, will run until 2034 and 2041 respectively.

Stephane Grandguillaume, Partner in charge of origination for the Fund, commented: “These projects are a good fit for 3i EOPF and complement the Fund’s existing portfolio. They are high quality, yielding projects which improve the diversification of the Fund.”

Phil White, Managing Partner and Head of Infrastructure, 3i Investments plc, added:

“We have made good progress in constructing a well-balanced portfolio for 3i EOPF through 3i’s pan-European projects platform active in eight countries in Western Europe.”

3i EOPF, which is managed by 3i’s infrastructure team, is a €456m fund investing in operational projects across Europe, with a focus on France, the Benelux, Germany, Italy and Iberia.  It targets a wide range of sub-sectors, primarily social infrastructure and transportation, but also telecoms and utilities. It aims to provide long-term yield to institutional investors.

-ENDS-

Download this press release  

 

For further information, contact:
3i Group plc

Thomas Fodor
Limited Partner enquiries
Tel: +44 20 7975 3469
Email: thomas.fodor@3i.com
Silvia Santoro
Investor enquiries
Tel: +44 20 7975 3285
Email: silvia.santoro@3i.com
Kathryn van der Kroft
Media enquiries
Tel: +44 20 7975 3021
Email: kathryn.vanderkroft@3i.com

 

Notes to editors:

 

About 3i Group

3i is a leading international investment manager focused on mid-market Private Equity and Infrastructure. Its core investment markets are northern Europe and North America. For further information, please visit: www.3i.com

About 3i’s Infrastructure business

3i is a leading infrastructure investor, with a track record of investing in infrastructure since 1987. The team of approximately 35 investment professionals manages or advises c.£3.7 billion of assets through a number of infrastructure investment vehicles, including 3i Infrastructure plc, 3i India Infrastructure Fund, 3i EOPF, 3i MIA and BIIF.

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The Carlyle Group Names Pooja Goyal Head of Expanded Renewable Energy Team

Carlyle

Renewable and Sustainable Energy Investment Strategy Further Enhances Carlyle’s Global Energy Platform

New York, NY  Global investment firm The Carlyle Group (NASDAQ: CG) announced today that Pooja Goyal will join the firm as a Partner and Head of its Renewable and Sustainable Energy Team (“RSEF”). She will begin this new role in July 2019 and be based in New York.

Ms. Goyal will lead RSEF’s dedicated team of investment professionals with deep sector and operational expertise who will invest globally in a portfolio of opportunities in the renewable and sustainable energy sector. Other RSEF senior team members include Catalin Breaban, Pascal Emsens and Simon Robinson, together with Senior Advisor Harry Bond, all of whom have strong international industry credentials and have worked closely with Marcel van Poecke, Chairman of Global Energy and Head of Carlyle International Energy Partners. The RSEF team will work closely with the Carlyle Power Partners team and Cogentrix, Carlyle’s power operating platform.

“With nearly 15 years of experience investing in the renewables and sustainable resources sector, Pooja is one of the most seasoned investors in renewable energy,” said Glenn Youngkin, Co-CEO of The Carlyle Group. “We are thrilled Pooja is joining the firm to lead Carlyle’s investment activities in this rapidly growing sector of global energy markets.”

“I have great admiration for Carlyle’s talented team and its experience investing in and growing energy companies across the globe,” Ms. Goyal said. “I am excited to leverage the One Carlyle platform and the RSEF team’s deep sector-specific expertise to help identify investment opportunities and create lasting value at portfolio companies at this pivotal time in the global energy market.”

The RSEF team leverages insights from Carlyle’s power, infrastructure and hydrocarbon businesses to find the best renewable and sustainable energy investment opportunities. Carlyle’s diversified $27 billion global energy platform operates 95+ portfolio companies across 31 countries and 6 continents, and has deployed nearly $3 billion over the past year and $9 billion over the past four years. The RSEF team is wholly dedicated to investing in renewable and sustainable energy businesses, primarily in developed countries.

* * * * *

Pooja Goyal Bio

Ms. Goyal has invested in the renewables and sustainable resources sector on a dedicated basis since 2005. She joins from Goldman Sachs where she most recently served as Head of the Alternative Energy Investing Group. Previously, Ms. Goyal served as Vice President of the Alternative Energy Investing Group and held various roles within Goldman Sachs’ Investment Banking Division. Ms. Goyal has also served on the Board of Directors of several companies and organizations, including the American Council of Renewable Energy.

Ms. Goyal graduated magna cum laude from the University of Pennsylvania with a Bachelor of Science in Finance and a Bachelor of Applied Sciences in Computer and Cognitive Science.

* * * * *

About The Carlyle Group

The Carlyle Group (NASDAQ: CG) is a global investment firm with deep industry expertise that deploys private capital across four business segments: Corporate Private Equity, Real Assets, Global Credit and Investment Solutions. With $216 billion of assets under management as of December 31, 2018, Carlyle’s purpose is to invest wisely and create value on behalf of our investors, portfolio companies and the communities in which we live and invest. The Carlyle Group employs more than 1,650 people in 31 offices across six continents.

Web: www.carlyle.com
Videos: www.youtube.com/onecarlyle
Tweets: www.twitter.com/onecarlyle
Podcasts: www.carlyle.com/about-carlyle/market-commentary

Contact:

Kelsey Markovich / Kevin Siegel
Sard Verbinnen & Co.
+1 (212) 687-8080
Carlyle-SVC@sardverb.com

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La Caisse publishes its 2018 Annual Report

Cdpq

The quality and resilience of la Caisse’s portfolio generate performance superior to its index.
Caisse de dépôt et placement du Québec today released its annual report for the year ended December 31, 2018.In addition to a detailed analysis of the financial results announced on February 21, 2018, the report provides a review of its activities. Below are the highlights:

TEN-YEAR PERFORMANCE

  • Annualized return of 9.2%.
  • Net assets grew from $120.1 billion in 2009 to $309.5 billion in 2018, with $171.6 billion in net investment results.
  • The proportion of assets in international markets increased from 36% in 2009 to 64% in 2018.

FIVE-YEAR PERFORMANCE

  • Annualized return of 8.4% and net asset growth of $109.4 billion from net investment results of $98.7 billion and net deposits of $10.7 billion.
  • Each of the three asset classes contributed significantly to la Caisse’s overall return, which exceeded its benchmark index. This difference represents $16.7 billion in value added.
  • The returns of the eight main clients ranged from 7.6% to 9.2%.

2018 PERFORMANCE

  • Overall return of 4.2% in 2018, higher than the benchmark and representing $5.3 billion in added value.
  • Net assets increased $11.0 billion due to net investment results of $11.8 billion, offset by net depositor withdrawals of $0.8 billion.
  • The returns of the eight main clients ranged from 3.7% to 4.4%.

LA CAISSE’S IMPACT IN QUÉBEC 

  • Assets in Québec’s private sector total $44.3 billion, up $11.8 billion in five years.
  • Partner of over 775 companies, including some 685 SMEs.
  • New investments and commitments of $21.2 billion over five years, including $7.3 billion in 2018.
  • 40% of transactions in 2018 were in new economy sectors.
  • Several concrete achievements under each pillar of la Caisse’s strategy in Québec, including:
    • Growth-creating projects: Beginning of construction on all branches of the REM; continued revitalization of downtown Montréal with the Projet Nouveau Centre (a $1-billion investment).
    • Growth and globalization: Investments in AddÉnergie, Ocean Group, Plusgrade and Transcontinental, in addition to the launch of Cheffes de file, an initiative to support the growth of companies owned by women.
    • Innovation and the next generation: Investments in Breather and Hopper, and support for BFL Canada and Frank And Oak to implement technology solutions that support their growth.

GLOBALIZATION

  • Globalization of la Caisse’s activities, one of the pillars of its strategy, which is reflected in:
    • Diversifying assets on a global scale, with exposure to international markets representing 64% at the end of 2018, up around $116 billion from December 31, 2013.
    • Higher annual returns of over 2%, which represent over $25 billion in additional returns over five years.
    • Increased and beneficial exposure to the United States, increased investments in Asia Pacific and Latin America, including in infrastructure in Mexico and Colombia.
    • Strengthened approach to strategic partnerships in development and growth markets with the implementation of a dedicated team.

LESS-LIQUID ASSETS AND CREDIT

  • Transactions valued at over $31 billion were concluded as part of the strategy to increase our investments in less-liquid assets and credit:
    • In infrastructure, investments totalled $5.8 billion, including increasing our stake in renewable energy leaders in North America and India.
    • In private equity, over $9 billion deployed internationally, with major investments in sustainable industry in Europe and the United States, as well as in commercial real estate services in Canada.
    • In real estate, transaction volume totalled $16.6 billion and portfolio repositioning accelerated with a significant increase in investment in the fast-growing industrial and logistics sector.
    • In credit, increased and diversified activities through loans for the construction of telecommunication towers in the United States, the acquisition of solar energy assets in Spain and optimizing the capital structure of a Québec insurance leader.

RISK MANAGEMENT

  • In 2018, market risk was stable and slightly below that of the benchmark portfolio.
  • During the year, several stress tests demonstrated the portfolio’s resilience relative to the market under various scenarios.
  • Market movements at the end of the year showed that the portfolio is as resilient as expected and that the strategy protected depositors’ assets.

STEWARDSHIP INVESTING

  • To accompany its Annual Report, la Caisse recently published its second Stewardship Investing Report, which sets out its vision and commitment to priority topics:
    • Climate Change: Strategy to address climate change that aims for a transition toward a low-carbon economy
    • Governance
    • Women in Business
    • International Taxation
    • Community Involvement
  • With regard to the fight against climate change, la Caisse outperformed its target with the addition of $10 billion in low-carbon assets in 2018, prompting it to raise the target for 2020.
  • The portfolio’s carbon intensity decreased 10% in 2018, which is on track to achieve the 25% target for 2025.
  • The electronic version of the Stewardship Investing Report
COMPENSATIONThe principles forming the foundation of the compensation program for all Caisse employees, in Québec and in international offices, are the same:

Main objectives (page 88 of the Annual Report)

  • Pay for performance by offering incentive compensation aligned with the returns delivered to depositors.
  • Offer competitive compensation to attract, motivate and retain employees with experience and expertise that allow la Caisse to achieve its strategic objectives.
  • Link the interests of management and depositors to focus their individual and team contributions on the long-term success of la Caisse.

Implementation and application 

  • Rigorous benchmarking of reference markets by a renowned independent firm, Willis Towers Watson, and studies on positions based outside of Canada by the firm McLagan.
  • At the request of the Board of Directors, validation of the equitable application of the compensation program was led by an independent consulting firm, Hugessen Consulting, specialized in compensation in the pension fund universe.
  • Review of each employee’s performance under a rigorous evaluation process to determine incentive compensation.
  • A component related to achieving carbon intensity reduction targets was added for the first time in 2018 as part of la Caisse’s investment strategy to address climate change.

Mandatory co-investment thresholds 

  • To foster better alignment of employees’ interests with la Caisse’s long-term sustained success, a significant portion of total incentive compensation for management and senior professionals is deferred over a three-year period, in compliance with Canada Revenue Agency rules, which require disbursing this amount after this period.The minimum thresholds must be deposited into a co-investment account for employees with direct influence on la Caisse’s organizational and financial performance:
    • At least 55% of the total incentive compensation of senior executives – or more than half of their incentive compensation – thereby strengthening the alignment of executives’ interests with those of depositors and making this measure even more stringent than current industry practices.
    • 35% of total incentive compensation for vice-president and intermediate and senior-level investment employees.
    • 25% of total incentive compensation for other senior management and professionals.
  • Amounts deferred in 2018 and to be disbursed in 2021 are at risk, as they vary upward or downward with la Caisse’s average absolute overall return for the period.
  • This year, employees (including senior executives), as part of the incentive compensation program, deferred $35.9 million until 2021. Employees of la Caisse’s international offices deferred $11 million to the co-investment portfolio.
  • Co-invested incentive compensation was disbursed in 2018, pursuant to program conditions and applicable tax rules. Amounts co-invested by the most highly compensated executives reporting to the Chief Executive Officer in 2015 and disbursed in 2018 are presented in Table 39 of page 97 of the 2018 Annual Report.

Incentive compensation

  • Since 2016, performance has been measured over a five-year period, to further strengthen sustained performance over the long term.
  • Including incentive compensation, total compensation for la Caisse’s employees in 2018 was slightly below the median of reference markets for superior performance over five years, as the annualized return was 8.4%, which corresponds to $16.7 billion of value added compared to the benchmark portfolio (page 90).
  • Pursuant to la Caisse’s strategy to deliver sustained performance over the long term, the following table provides the context in which 2018 incentive compensation was awarded to la Caisse’s employees, compared to the cumulative value added, including a deferred portion, which fluctuates upward and downward based on future returns.
  • Presenting total compensation awarded provides a better understanding of the alignment with la Caisse’s performance.
  • The increase in incentive compensation awarded from 2017 to 2018 mainly stems from sustained returns, increase in the number of investment professionals – particularly in international markets – and performance resulting from the global markets strategy.
  • La Caisse’s exposure to international markets now represents 64% of the portfolio, and generates beneficial returns for its depositors. Over five years, investments in international markets significantly stimulated returns – over 2% more annually – representing over $25 billion.
  • La Caisse also generated conclusive results over the last five years in Québec, with over $21 billion in new investments and commitments during the period.
2018 Compensation
Compensation for 2018 reflects sound management and tight control over expenses, as shown by the following:

  • La Caisse’s operating expenses and external management fees were stable in 2018 compared to 2017, and at 22 cents per $100 of average assets, represent a ratio that compares favourably to that of its industry.
  • Around 90% of la Caisse’s assets are managed internally, representing an average saving of five times the cost of externally managing these assets.
  • Each $1,000 in value added generated over five years by la Caisse has been steady at a cost of less than $0.04 in incentive compensation for employees since 2014.
  • For each $1,000 of five-year average return, the total compensation cost was stable at $0.01 for each from 2014 and 2018.
  • Senior executive compensation is an average of 45% lower than the maximum of reference markets (see tables on pages 94 and 100).

“In markets that are as demanding as they are uncertain, la Caisse’s steadfast strategy and solid portfolio once again generated solid returns for depositors and Quebecers. To deliver this performance, la Caisse needs to be able to rely on the best talent in a highly competitive market, here and internationally”, stated Robert Tessier, Chairman of the Board of Directors of la Caisse.

Compensation of the President and Chief Executive OfficerBase salary and direct compensation

  • At his request, Mr. Sabia has received no salary increase since he was appointed in 2009. His base salary remained unchanged in 2017 and 2018.

Incentive compensation and co-investment

  • In accordance with policies that emphasize achievement of la Caisse’s business objectives and its performance, the Board of Directors is of the opinion that “Mr. Sabia has continued to deliver remarkable performance and has greatly surpassed the objectives that were set for him.”
  • Mr. Sabia received $1,320,000 of his 2018 incentive compensation and chose to defer $1,980,000 into the co-investment account. The value of this amount will be increased or decreased according to la Caisse’s average absolute return over the three-year period ending in 2021.
  • Pursuant to Canada Revenue Agency rules, he was required to withdraw $2,044,640 that was disclosed and co-invested in 2015, to which was added the return earned over the period (page 97).

Pension plan and severance pay

  • When Mr. Sabia was appointed, he waived membership in any pension plan for the duration of his mandate – except for the mandatory plan under Retraite Québec rules for management personnel.
  • He also waived any severance pay.

Comparisons to reference markets

  • Details regarding the compensation of the President and Chief Executive Officer and the five most highly compensated executives are provided on pages 92 to 100 of the 2018 Annual Report.

The electronic version of the 2018 Annual Report and 2018 Annual Report – Additional Information are available at

Please note that only the French version is currently available. The English version will be available shortly.

ABOUT CAISSE DE DÉPÔT ET PLACEMENT DU QUÉBEC

Caisse de dépôt et placement du Québec (CDPQ) is a long-term institutional investor that manages funds primarily for public and parapublic pension and insurance plans. As at December 31, 2018, it held CA$309.5 billion in net assets. As one of Canada’s leading institutional fund managers, CDPQ invests globally in major financial markets, private equity, infrastructure, real estate and private debt. For more information, visit cdpq.com, follow us on Twitter @LaCDPQ or consult our Facebook or LinkedIn pages.

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For more information

  • MEDIA CONTACT+1 514 847-5493 (Québec/Canada)+1 212 596 6314 (International)medias@cdpq.com

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HQ Equita successfully concludes fundraising for HQ Equita V

HQ Capital

Bad Homburg, April 11 2019 – HQ Equita has successfully concluded fundraising for its fifth fund, HQ Equita V (“Fund V” or the “Fund”), with capital commitments totaling €308 million. With the Fund now closed, at a level comparable to its main predecessor fund, HQ Equita remains true with its strategic investment focus.

Established as a GmbH & Co. KG based in Bad Homburg, Germany, Fund V will focus on investments in small- and medium-sized enterprises (“SMEs”) in German-speaking Europe. The Fund’s limited partners include entrepreneurial families, foundations, and select institutional investors, consistent with HQ Equita’s historical investor base comprised of entrepreneurial capital. With investors from both European and non-European countries committing to the Fund, HQ Equita continues to expand its international network.

“Our strategy of developing partnerships to further advance and create value for German-speaking SMEs attracted great interest from investors. We will leverage our team’s deep experience and our broad network to support our portfolio companies’ growth and generate value for both the companies and our investors. With Fund V, we will continue to invest in SMEs, seek to expand our team and advance our strategic development even further,” said Christine Weiß, Partner and Managing Director at HQ Equita.

Since 2017, Fund V has already invested in four attractive companies. The portfolio includes WELL PLUS TRADE (2017), The Packaging Group – consisting of FAWEMA and HDG – (2018), r2p (2018), and EBERTLANG (2019). WELL PLUS TRADE is a specialist developer of protein-based sports nutrition. The Packaging Group is a leading manufacturer of packaging machines. r2p is an international provider of digital systems for public transportation. And EBERTLANG is a leading value-added distributor of infrastructure software for SMEs in German-speaking Europe.

With these four investments, HQ Equita continues to pursue its nearly three-decade long focus on investing in highly specialized small- and medium-sized “hidden champions” in Germany, Austria and Switzerland. By investing in companies with revenues ranging between €20 million and €150 million, HQ Equita is able to provide sustainable growth capital, enact succession planning solutions, and provide the network necessary to develop corporate structures and internationalize the businesses.

“HQ Equita has continued to enhance its profile over the years and remains a trusted partner for growth capital and succession planning solutions for SMEs in German-speaking Europe. With the successful closing of Fund V and the initiation of the generational management change, the foundation for long-term stability and continuity at HQ Equita is firmly in place,” said Dr. Bernd Türk, Managing Director and Chairman of the Executive Committee of HQ Capital.

After three successful investments in the last 12 months, HQ Equita will continue to strategically deploy capital in attractive portfolio companies in the German-speaking DACH region.

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