PSP Investments Posts Strong Performance in Fiscal Year 2018 - Net Return of 9.8% Brings Net Assets to $153.0 Billion

Montréal (ots/PRNewswire) -

- One-year total portfolio net return of 9.8% generated $13.5 billion
of net income, net of all PSP costs.
- Five-year annualized net return of 10.5% which is 1.1% above the
Policy Portfolio benchmark return.
- Ten-year net annualized return of 7.1% generated $23.8 billion of
cumulative net investment gains above the return objective of 5.8%.

The Public Sector Pension Investment Board (PSP Investments)
announced today that it ended its fiscal year March 31, 2018 with net
assets of $153.0 billion, compared to $135.6 billion the previous
fiscal year, an increase of 12.9%. The investment manager reported a
one-year total portfolio net return of 9.8% on its investments and
generated $13.5 billion of net income, net of all PSP costs. This
return is significantly greater than the Policy Portfolio benchmark
return of 8.7%.

"This is a year we can be proud of," said Neil Cunningham,
President and Chief Executive Officer at PSP Investments. "We
sustained performance over a year marked by market volatility, which
shows clearly that our strategic focus on increased diversification
is generating returns. Once again, our people highlighted the
possible in their active commitment to our shared purpose: to
contribute to the financial security of the contributors and
beneficiaries who have served Canada throughout their careers."

Net assets increased by $17.4 billion in fiscal year 2018,
attributable to net income of $13.5 billion and net contributions of
$3.9 billion. All asset classes saw strong returns.

Asset Class Highlights
NET AUM ONE-YEAR FIVE-YEAR
% OF TOTAL NET
ASSET CLASS RETURN RETURN
ASSETS
Public Markets $ 76.7B 8.3% 10.6%
50.1%
Real Estate $ 23.2B 13.6% 12.7%
15.2%
Private Equity $ 19.4B 12.9% 7.9%
12.7%
Infrastructure $ 15.0B 19.3% 13.8%
9.8%
Natural Resources $ 4.8B 11.2% 13.1%
3.2%
Private Debt $ 8.9B 8.2% n/a
5.8%
Complementary Portfolio $ 2.2B 33.0% n/a
1.4%

As of March 31, 2018:

- Public Markets had net assets under management of $76.7 billion, a
decrease of $0.5 billion from fiscal year 2017, and generated
investment income of $6.3 billion, for a one-year return of 8.3%,
compared to a benchmark of 7.7%. Public Markets continued to
generate significant returns in fiscal year 2018, despite increased
geopolitical risk, market volatility and rising interest rates,
mainly during the fourth quarter. At fiscal 2018 year-end, net
assets managed in active strategies totalled $45.8 billion, up from
$38.8 billion the previous year, while net assets managed in
internal active strategies totalled $31 billion, up from $24.6
billion.
- Real Estate had $23.2 billion in net assets under management, up by
$2.6 billion from the previous fiscal year, and generated $2.8
billion in investment income, resulting in a 13.6% one-year return
versus 12.3% for the benchmark. Fiscal year 2018 was a year of
stabilization and consolidation, reflecting the maturity of the
Real Estate portfolio. The group achieved strong performance
despite an ongoing low-yield environment. During fiscal year 2018,
Pierre Gibeault was appointed Managing Director and Head of Real
Estate Investments.
- Private Equity had net assets under management of $19.4 billion,
$3.5 billion more than in fiscal year 2017, and generated
investment income of $2.1 billion, for a one-year return of
12.9%-versus a 3.4% loss in fiscal year 2017-compared to a
benchmark return of 17.6%. The strong increase in fiscal year 2018
performance was mainly driven by strong valuation gains, notably in
the financial and industrial sectors, but was partially offset by
underperformance of certain investments. However, investments
completed in the last three years, representing $9.9 billion of
assets, have generated returns significantly above benchmark.
Private Equity deployed a total of $4.4 billion (including $2.3
billion in new direct investments and co-investments) and committed
a total of $4.1 billion for future deployment through 17 funds, 11
of which are with new fund partners. During fiscal year 2018, Mr.
Simon Marc was appointed Managing Director and Head of Private
Equity.
- Infrastructure had $15.0 billion in net assets under management, a
$3.9 billion increase from the prior fiscal year, and generated
$2.3 billion of investment income, leading to a 19.3% one-year
return, relative to the benchmark return of 12.1%. The group
deployed $3.3 billion in fiscal year 2018, including $2.2 billion
in direct investments. During fiscal year 2018, Mr. Patrick Samson
was appointed Managing Director and Head of Infrastructure
Investments.
- Private Debt had net assets under management of $8.9 billion, an
increase of $4.5 billion from the prior fiscal year, and generated
net investment income of $569 million, resulting in an 8.2%
one-year return, compared to a benchmark of 2.3%. The group
deployed net $4.3 billion across over 30 transactions, including
investments in revolving credit facilities, first and second lien
term loans, and secured and unsecured bonds. The group's London
team made great strides toward its long-term portfolio allocation
target, with European assets under management accounting for 24% of
the global Private Debt portfolio, up from 8% the prior year.
- Natural Resources had net assets under management of $4.8 billion,
an increase of $1.1 billion from the previous fiscal year, and
generated record investment income of $450 million, for a one-year
return of 11.2%, versus the 3.1% benchmark. The increase in net
assets under management resulted primarily from $864 million in net
deployments and $332 million in valuation gains. Income was driven
by strong cash flows and valuation gains. The group made
significant progress again this year in diversifying its
investments into the agriculture sector, which now account for $2
billion of assets under management. During fiscal year 2018, Mr.
Marc Drouin was appointed Managing Director and Head of Natural
Resources.

Corporate Highlights

- Our Board of Directors appointed Neil Cunningham as President and
CEO on February 7, 2018. Prior to this appointment, Mr. Cunningham
served as PSP's Senior Vice President, Global Head of Real Estate
and Natural Resources at the organization.
- We launched our Inclusion & Diversity (I&D) Forum and initiated an
I&D Council co-chaired by Mr. Cunningham, for whom an active
commitment to inclusion and diversity is a top priority.
- We also received an important accolade by being recognized as one
of Montréal's Top Employers.
- This year's annual report marks the launch of PSP's new brand, Spot
the Edge, which embodies our passion for exploring every angle,
across asset classes, markets and industries, to broaden our
perspectives and hone in on opportunities.
- We continued to integrate environmental, social and governance
factors into our investment decision-making process across asset
classes. Significant progress was made on all pillars of our
responsible investment strategy. Our second annual Responsible
Investment Report can be consulted here. (http://www.investpsp.com/
media/filer_public/documents/PSP-2018-responsible-investment-report
-en.pdf)

"Our talented, high-performing people and expanded global
footprint have allowed us to spot the edge and deliver solid and
consistent results," Mr. Cunningham said. "Our vision is to be a
leading global institutional investor, a partner of choice to the
investment world and an enabler of complex investments. We have the
knowledge, talent, systems and flexibility to seize global
opportunities as they arise."

For more information on PSP Investments' fiscal year 2018
performance, please visit our dedicated microsite at
http://www.investpsp.com or download the annual report here (http://w
ww.investpsp.com/media/filer_public/documents/PSP-2018-annual-report-
en.pdf).

About PSP Investments

The Public Sector Pension Investment Board (PSP Investments) is
one of Canada's largest pension investment managers with $153 billion
of net assets as of March 31, 2018. It manages a diversified global
portfolio composed of investments in public financial markets,
private equity, real estate, infrastructure, natural resources and
private debt. Established in 1999, PSP Investments manages net
contributions to the pension funds of the federal Public Service, the
Canadian Forces, the Royal Canadian Mounted Police and the Reserve
Force. Headquartered in Ottawa, PSP Investments has its principal
business office in Montréal and offices in New York and London. For
more information, visit investpsp.com (http://www.investpsp.com/) or
follow us on Twitter (https://twitter.com/investpsp?lang=en) and
LinkedIn (https://www.linkedin.com/company/psp-investments/).

Media contact: Maria Constantinescu, PSP Investments, Canada:
+1-514-218-3795, Toll-free: +1-844-525-3795, media@investpsp.ca

ots Originaltext: PSP Investments
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