The usually staid Canada Pension Plan Investment Board headed into more exciting territory Friday with its first forays into motorsports.
The manager of Canada Pension Plan's investment portfolio unveiled two deals on Friday – a 39-per cent-stake in Dorna, a Madrid-based marketer of motorbike racing, and a $400-million financing for Formula One Group, the company behind F1 auto racing.
CPPIB said it is trying to capitalize on the growing global interest in top-level racing, from spectators, advertisers and broadcasters.
"What really drew us, I think, was the thesis behind tier one motorsports because they can really draw a premium in terms of viewership, broadcast rights and advertising," said André Bourbonnais, CPPIB's senior vice-president of private investments.
The $165-billion CPP fund operates on behalf of 18 million contributors and beneficiaries. It is best known as a big investor in infrastructure such as toll roads, and holds a broad range of Canadian and foreign equities, which make up 51 per cent of its assets.
The fund's investment program was expanded in 2008 to allow for private debt investments like the Formula One private placement. The CPPIB has about $9-billion in private debt, and that amount is growing.
Mr. Bourbonnais said Formula One is an attractive brand for partners and sponsors and has stable revenue streams from race promotions, broadcasting rights, advertising and sponsorship.
"For us is was really an analysis of who was the counter-party, and in F1 if your counter-party is the principality of Monaco you're pretty sure they're going to be good on their commitment," he said. The debt has a maturity date of 2019 and came out of the U.K. office.
Terms of the Dorna deal were not released. Mr. Bourbonnais said the event management, media and marketing company with global rights to the MotoGP motorcycle racing series, is positioned to expand into such emerging markets as India, Brazil and Russia.
The two deals were a first in sports by the pension fund manager, but other pension funds have had success from investing in sports.
The Ontario Teachers' Pension Plan recently sold its controlling stake in Maple Leaf Sports and Entertainment, the company behind the Toronto Maple Leafs NHL hockey team and Toronto Raptors NBA basketball team, for $1.07-billion.
With files from The Canadian Press
A TASTE FOR FOREIGN ASSETS
People get serious when they save for their retirements, and the CPP Investment Board is equally serious when seeking investments.
Back in 2006, board member Mark Wiseman – now its president and chief executive officer – told The Globe and Mail that the board was looking for "good, old fashioned, boring assets."
Those boring assets are usually sought with stable cash flow in mind. Formula One Group is certainly not boring, though the returns from CPPIB's loan deal with the racing company shouldn't be as risky as one of its races.
The loan marks the latest in a series of international investments for the fund. In July, CPPIB announced its largest-ever real-estate investment – $1.04-billion in two Australian office towers. And in April, the fund bought a 49.9-per-cent interest in Grupo Costanera, giving it a stake in five of Chile's major toll roads.
In the past few years, CPPIB has made smaller investments in countries including China, Norway, Britain and the United States.
Not all of its foreign investments have been successful: In 2008, CPPIB was shut down by government veto when it sought a $1.4-billion stake in New Zealand's Auckland International Airport Ltd., the country's largest airport.