CPPIB Takes Stake in Signature Bank Loan Portfolio

The Canada Pension Plan Investment Board (CPPIB) is participating in a joint venture investment into a portfolio of mortgage loans that previously were run by Signature Bank.

The C$576 billion (US$430 billion) public pension plan is partnering with asset management giant Blackstone and real estate specialist Rialto Capital to acquire a 20% stake in the portfolio, which has been run by the Federal Deposit Insurance Corporation (FDIC) since Signature’s collapse in March this year.

The investment is worth approximately US$1.2 billion, according to a CPPIB statement. The FDIC has retained an 80% stake in the portfolio and has provided financing “equal to 50% of the venture’s value”, the statement said.

The long-term opportunity

The portfolio of commercial real estate loans includes more than 2,600 loans against properties primarily in the metropolitan area of New York. According to CPPIB, approximately 90% of the portfolio consists of fixed-rate loans with low coupons and strong debt coverage.

Geoffrey Souter, managing director and head of real assets credit at CPP Investments, the investment subsidiary of CPPIB, said the deal reflected his organization’s view that real estate credit was “a promising source of long-term returns”.

“This opportunity builds on our longstanding partnership with Blackstone and is a testament to CPP Investments’ expertise in real estate credit, demonstrating our ability to transact quickly and at scale,” Souter added.

Blackstone investment vehicles Blackstone Real Estate Debt Strategies and Blackstone Real Estate Income Trust, Inc have also invested alongside CPPIB, as have funds run by Rialto Capital. Blackstone is to be the asset manager for the portfolio, while Rialto will service the loans.

Other private markets activity

Separately, CPPIB has also upped its stake in UK-based clean energy provider Octopus Energy Group, with an additional investment of £300 million (US$379 million).

The investment makes up part of an $800 million fundraising round for Octopus, with other lead investors including Origin Energy of Australia and Japan’s Tokyo Gas, alongside Generation Investment Management, a specialist clean energy investment firm chaired by former US vice president Al Gore.

Bill Rogers, managing director and global head of sustainable energies at CPP Investments, explained that the increased investment in Octopus was an example of CPPIB’s interest in backing “leading companies across the energy transition with our flexible capital, global network and deep expertise”.

CPPIB is not the only fund to have recently made private markets investments. Earlier this month, the Alberta Investment Management Company (AIMCo) announced the closing of a Singapore-based infrastructure fund in which it is the anchor investor.

Seraya Partners Fund 1 raised US$800 million from investors, which it will allocate to digital infrastructure and clean energy technology investments across Asia.

In September, AIMCo opened a Singapore office to support its investments across the Asia region. Jason Munsch, managing director for infrastructure and head of external partnerships, said the Seraya investment was “a strong recognition of the growing opportunities for AIMCo’s clients that lie in Asia”.

AIMCo manages assets on behalf of several public pension plans, endowments and government funds in the province of Alberta.

Illinois’ private markets commitments

South of the border in Illinois, the Illinois Municipal Retirement Fund (IMRF) has also made a number of commitments to private markets funds totalling approximately US$544 million.

The fund’s board of trustees approved commitments to five private credit funds after a search for direct lending, opportunistic credit and special situations fund managers. The commitments included:

• Up to US$100 million to the AG Direct Lending Evergreen Fund, run by real estate and credit manager TPG Angelo Gordon.
• Up to US$100 million to Atalaya Capital Management’s Atalaya A4 fund, which focuses on direct lending.
• Up to US$100 million to the Comvest Credit Partners VII fund, a private credit portfolio managed by Florida-headquartered Comvest.
• Up to US$50 million to CapitalSpring’s Senior Income Fund II. CapitalSpring is a specialist in providing private financing to the food and restaurant sectors.
• Up to US$50 million to PennantPark Credit Opportunities Fund IV, a middle-market private credit fund.

The IMRF also added to two existing relationships, investing additional capital with European property specialist Ares and venture capital firm Coalesce.