John Graham was promoted to chief executive of the Canadian Pension Plan Investment Board on Friday, putting him in charge of a $ 373 billion global package that includes everything from Britain’s Southampton port to Axel Springer’s German media empire to chain reic Petco.
The fund quickly needed a new CEO after Machin flew to the United Arab Emirates, where he received the Covid-19 vaccine. He had committed a double political sin – taking a trip against Prime Minister Justin Trudeau’s warnings to avoid international travel, and getting a bullet that most other Canadians can’t get because of so little supply vaccines in the country.
After the Wall Street Journal published Machin’s travels Thursday night, he resigned.
The board surprised some CPPIB managers by turning to Graham, who was not seen as a natural follower of Machin, according to people familiar with the situation. The group was thrown into a situation that may not have been prepared for: Machin had been CEO for less than five years and was not expected to leave anytime soon.
But allies describe Graham as a safe choice – smart and solemn, with the careful mind of a Canadian public servant. It may follow the existing strategy of expanding international offices and investing more in private funds, these people said.
“When you look at his CV, you see credit, private markets – that’s an important part of the future of where that retirement savings investment process needs to go, to be successful and generate net interest rates. that ‘s high enough, “said Keith Ambachtsheer, a pensions adviser who provided strategic advice on governance, finance and investment issues to Canadian pension funds, including CPPIB.
Graham, 49, spent nearly a decade as a research scientist at Xerox Holdings Corp. After completing a doctorate in physical chemistry. He joined CPPIB in 2008 in the portfolio design group before moving to private investments and credit.
In 2018, Machin Graham was promoted to senior management director who led a credit investment team deployed across Toronto, New York, London and Hong Kong. The group’s recent focus has been on growing in Asia and emerging markets, particularly in China, India and Brazil.
“These are markets that are going to grow, they are going to become increasingly relevant in the global economy and it makes sense to spend time to invest capacity and infrastructure for investment,” he said. Graham in a 2019 interview with Bloomberg.
Private credit
Graham also relied on a deeper push into private credit, where fishermen avoid traditional capital markets, to fill a need for scarce yields with low interest rates.
In an interview in December, Machin said that exile in public markets was a signal for him to expand his fund’s huge stake in private assets. He had continued to build Canadian-funded private holdings since becoming the first foreign-born director in June 2016.
About 25% of CPPIB’s portfolio is in private equity and another 17% in real estate and infrastructure, mostly private, as of Dec. 31, according to fund publications.
The strategy is seen as a success, with the fund returning 9.7% annually over the last five calendar years after costs. Almost all of that was on Machin’s watch as CEO.
But it was not enough to save his job in a country where a number of public figures have exploded their jobs by leaving for holidays or other selective causes during the pandemic.
Ontario Finance Minister Rod Phillips was forced to resign on December 31 after it emerged he took a Caribbean vacation at a time when many businesses in the province were ordered to close their doors. close. Alberta cabinet minister Tracy Allard resigned after moving to Hawaii.
Nearly a year into the pandemic, “there’s a fragile population out there that’s not going to suffer much for Leaders who are seen going through the rules,” James Moore, a consultant for law firm Dentons and a former Canadian cabinet minister, said in an interview with BNN Bloomberg Television.
Perhaps that explains why Finance Minister Chrystia Freeland ‘s office blamed Machin for his visit to Dubai, despite the government’ s practice of saying as little as possible about CPPIB ‘s work. The fund’s chief executive reports to a board set by the government, but the business leaders include Royal Bank of Canada Chair Kathleen Taylor, not political figures.
The CPPIB board missed the opportunity to send out the message that it is truly independent by retiring over a single judgment rather than defending it, according to the chief executive of another major pension fund that asked not to be identified as he does not have the authority to discuss the situation in public.
This story was published from a wire group group with no text changes. Only the headline has changed.