Showing posts from 2024

Fitch Warns Canadian Pensions Face More Pressure on Real Estate and Private Credit

James Bradshaw of the Globe and Mail reports Canadian pension funds face more pressure on real estate and private credit, Fitch report says: Canada’s largest pension funds will likely take more losses on real estate and see defaults on private loans rise over the coming year, but have enough financial flexibility to mostly avoid having to sell assets at depressed prices, according to a report from Fitch Ratings Inc. A higher cost of debt and slower economic growth have created a tough investing environment, pushing down the value of some private assets that pension funds own. That pressure has been most noticeable in real estate, where almost all of the country’s largest pension fund managers suffered losses ranging from 5 per cent to nearly 16 per cent, erasing billions of dollars of asset value last year. Some pension fund chief executive officers have signalled that the worst pain may be over for real estate investors as central banks have started to cut rates, giving

CalPERS Posts 9.3% Gain for Fiscal 2024

Eliyahu Kamisher and Marion Halftermeyer of Bloomberg report CalPERS posts 9.3% gain for fiscal 2024, driven by stocks: The California Public Employees’ Retirement System reported a 9.3% gain for its latest fiscal year, with returns driven largely by public equity investments and private debt. The returns, which outpaced a 6.8% annual target, pushed total assets at the biggest US public pension fund to $502.9 billion for the fiscal year ended June 30, Calpers said Monday in a statement. That’s enough to cover 75% of its future obligations, better than 72% at the end of the previous year. The preliminary five-year average return now stands at 6.6%, up from 6.1% the previous fiscal year. Calpers said that public equity investments led the way among asset classes with an estimated 17.5% return, and that private debt came in second at 17%. Private market returns are reported with a one-quarter lag. The largest US pension fund is increasing its exposure to private equity and pri

Echos of 1999?

Alexandra Semenova of Bloomberg reports Kolanovic's departure triggers an echo on Wall Street from 1999: It’s been about 25 years since Wall Street had a serious bear hunt. And it appears another one is starting up now. Early on Aug. 27, 1999, the finance world was rocked by the resignation of one of its most committed pessimists, Charles Clough, Merrill Lynch & Co.’s chief investment strategist. Clough’s opinion was highly regarded, but he’d committed the stock market’s cardinal sin, remaining bearish in the face of a relentless rally — in this case, the dot-com frenzy that sent the S&P 500 Index soaring 220% from the start of 1995 to the end of the century. That may feel like a long time ago, but on Wall Street, as in Shakespeare, the past is often prologue. And so, the abrupt exit of Marko Kolanovic last week after 19 years at JPMorgan Chase & Co. is reminding many traders, bankers and analysts of Clough’s adieu. Once again, a prominent strategist was tak

Private Equity's Creative Wizardry Posing Systemic Risk?

Kat Hidalgo, Allison McNeely, Neil Callanan and Eyk Henning of Bloomberg report that private equity's creative wizardry is obscuring danger signs: As Pete Stavros addressed the private equity industry’s yearly shindig in Berlin last month, the KKR & Co. executive’s words were slightly less headline grabbing than those of Apollo Global Management’s co-president Scott Kleinman. But they were just as troubling. Whereas Kleinman went in hard with his warning that “everything is not going to be okay” for buyout firms, Stavros joined in with the concession that his industry may have gotten “too creative” lately. Noisy or not, his comment strikes at the heart of an issue that’s starting to disturb everyone from investors to regulators: PE’s current mania for financial engineering. For decades the private equity model seemed unassailable, transforming the industry’s image from Barbarians at the Gate to crucial pillar of capitalism. Funds raised money, bought businesses, loa

CPP Investments' CEO Ready to Seize Opportunities in Real Estate?

Neil Callanan of Bloomberg reports distressed commercial property buyers see ‘exceptional bargains’: Distressed investors see one of the best opportunities in a generation to buy troubled US real estate assets as the commercial property crash continues to roil the market. Private equity firms are already positioning to take advantage. About 64% of the $400 billion of dry powder that the industry has set aside for property investment is targeted at North America, the highest share in two decades, according to data compiled by Preqin. The fear elsewhere is that a strong US bias will mean other parts of the world won’t draw the same demand, delaying the work out of troubled loans and properties there. PE firms want to take advantage of deep American discounts after office values fell by almost a quarter last year, more than in Europe, following the pandemic work from home shift. Almost $1 trillion of debt linked to commercial real estate will mature this year in the US, accor

CDPQ's Verene Energia Acquires a Strategic 124‑km Asset in Brazil

Earlier today, CDPQ announced its power transmission platform Verene Energia acquired a strategic 124‑km asset in Brazil: SPE 7 will be integrated into Verene Energia, CDPQ’s power transmission platform, expanding its portfolio of existing assets Acquisition reaffirms CDPQ’s interest in the transmission sector where it sees opportunities for further investment to unlock the full potential of renewable energy projects Verene Energia, a power transmission platform, and its owner CDPQ, a global investment group, today announced an agreement with Equatorial Energia S. A. for the acquisition of SPE 7, a strategic and modern power transmission network spanning 124 kilometres in the state of Pará, in northern Brazil. The transaction, valued at up to CAD 210 million (BRL 841 million), marks CDPQ’s third power transmission investment in Latin America in two years, followi