Jenkins makes his mark running private investments at CPPIB

Mark Jenkins has spent less than a year leading Canada Pension Plan Investment Board’s private investments group. But he has already put his stamp on the job, overseeing the pension system’s acquisition of Antares Capital and its first direct private equity deal since 2013.

Jenkins started out big, playing a key role in CPPIB’s $12 billion purchase of Antares, the sponsored lending unit of GE Capital. The deal, CPPIB’s largest ever, owed much to the work Jenkins put into building the pension fund’s own private debt platform.

Hired by CPPIB from Barclays in 2008, Jenkins was tasked with creating the platform from scratch. Within seven years it became a major player in the global market, deploying almost C$19 billion ($14.3 billion) in term loans, high-yield bonds and mezzanine debt, and expanding its assets tenfold.

Despite the debt portfolio’s rapid growth, CPPIB wanted something more, something it could not get on its own, Jenkins said in an interview with Buyouts. It wanted access to quality mid-market lending opportunities.

“Ninety-nine percent of our private credit business is large-caps,” he said. “We did a few mid-market deals, which were extremely attractive because they are better priced, better structured and involve stickier relationships. But they are also labor-intensive. We didn’t have enough bodies.”

CPPIB began exploring strategies for creating access. In April, it found its answer when GE Capital announced it would sell Antares. “Antares has set the gold standard in mid-market deal origination,” Jenkins said. “Acquiring it gave us the exposure we were looking for.”

Jenkins believes CPPIB’s experience as a global lender has prepared it to be a “knowledgeable owner” of Antares. The pension fund will use this knowledge to positively influence Antares’ future direction, including organizational and strategic changes that can “optimize the platform,” he said.

Since it was bought by CPPIB in August, Antares has restarted its collateralized loan obligations business, Buyouts reported last month. It is also considering new activity, such as underwriting junior capital.

Just as CPPIB was wrapping up the Antares acquisition, it joined Permira in buying business software maker Informatica. Priced at $5.3 billion, it is CPPIB’s first major direct private equity deal since October 2013, when it teamed up with Ares Management to buy Neiman Marcus for $6 billion.

Still too frothy

CPPIB has stepped cautiously with direct deals due to concerns over aggressive pricing. This view, frequently articulated by Jenkins’ predecessor, André Bourbonnais, and by President and CEO Mark Weisman, is shared by Jenkins. “Things are still too expensive,” he said.

Market frothiness has reinforced CPPIB’s disciplined approach to investing and its selective focus, Jenkins said. The pension fund has preferred opportunities in industries it knows well, such as information technology.

This explains CPPIB’s confidence in investments like Informatica. It may also explain October’s decision to commit $400 million to the funding of Altice’s planned $17.7 billion purchase of Cablevision Systems.

Between direct deals, CPPIB has emphasized other priorities, such as debt financing, Jenkins said. He believes this flexibility speaks to CPPIB’s broad-based capital structure, which “affords an ability to choose.”

Reorganizing

Jenkins was named senior managing director and global head of CPPIB Private Investments in January. He then oversaw C$65 billion ($49 billion) in direct and fund investment assets. Bourbonnais, who occupied the job for five years, left to become CEO of PSP Investments, a pension investment manager.

At the time of Jenkins’ appointment, CPPIB reorganized its private market activity. The change resulted in a new CPPIB Private Investments that accounts for all directly held private equity, credit and infrastructure assets. At the end of March, the group managed C$40.3 billion in assets. With recent deal making that number is now closer to C$50 billion, Jenkins said.

Funds, secondaries and co-investments, formerly part of CPPIB Private Investments, now fall under a new C$63.7 billion investment partnerships branch led by Senior Managing Director Pierre Lavallée. CPPIB partners with some 80 firms, including Apollo Global Management, Birch Hill Equity Partners, CVC Capital Partners, KKR, Onex Corp and TPG Capital.

The reorganization has not created a gap between CPPIB’s direct and fund sides, Jenkins said: “The design separates the teams, but in function they are still together. The interconnectedness is already ingrained. After all, we invest out of the same pool of capital.”

Cooperation is essential, Jenkins added, because CPPIB relies on funds for co-investment and co-sponsorship opportunities.

“We will always partner with private equity funds,” he said. “They lend a global perspective and allow us to achieve greater scale.”

Toronto-based CPPIB held C$268.6 billion in assets at the end of June. In October, it opened an office in Mumbai, adding to locations in Hong Kong, London, Luxembourg, Mumbai, New York and São Paulo.

Photo of Mark Jenkins, senior managing director and global head of CPPIB Private Investments, courtesy of CPPIB.