Remember the cheery pieces from the MSM about the CPP Investment Boards recent home run on our $300 million Skype investment? I wonder if the same interest will be shown in yesterdays Freescale initial public offering, now that our ~50% paper loss on that investment has been confirmed in the marketplace .
I was a big fan of the Skypke deal from the outset , but one of the challenges with LP co-investing is simply this: do you show them every deal? Or just the ones that are larger than the private equity firm wants to carry on its own balance sheet? If the average mega buyout firm does 12 transactions in a specific fund, and syndicates a third of them to their Limited Partners based solely on the sizes of the equity cheque required, how does the LP pick-and-choose whether to go into the deal or not? One of the primary reasons why pension funds invest into capital pools is to diversify their risk; which is undermined when you double or triple down on a deal .
The strategy worked in Skype, but not with EMI or Freescale, to name but two examples.