Clairvest Group Inc. has closed the Clairvest Equity Partners Limited Partnership fund after raising the final $50 million from the CPP Investment Board, bringing the total raised from outside investors to $164 million. In addition, Clairvest has committed to invest $55 million of its own capital alongside CEP, for a total capital pool of $219 million.

“We created this fund to accelerate our growth strategy. We now have access to significant third party capital to pursue private equity investments that will generate above-average returns,” said Jeff Parr, co-CEO of Clairvest. “When we announced the first closing of CEP back in March, we were targeting a combined capital pool of between $150-$200 million, so at $219 million we’ve exceeded our goal.”

As manager of the fund, Clairvest will receive management fees and, ultimately, a share of the profits from CEP.

The largest investors in the combined capital pool are Clairvest ($55 million), the CPP Investment Board ($50 million), and a large Ontario pension plan ($50 million). Investment capital will be allocated from Clairvest and CEP, based on their pro rata 25-75 capital commitments to the pool.

Participants in CEP will participate in the unique private equity investment opportunities. Clairvest has achieved a weighted average internal rate of return of 26% on its realized investments.

Clairvest also announced that it has issued 2,230,954 non-voting Clairvest shares to the CPP Investment Board at $7.56 per share, for aggregate consideration of $16,866,000.

The purchase price of this new class of shares represents a 10% discount to the book value of Clairvest’s common shares, which was $8.40 per share as at June 30, 2001. The non-voting shares represent a 10% equity interest in Clairvest, on a fully-diluted basis. The non-voting shares are convertible to common shares in 10 years, at a ratio based on the book value and the trading price of the common shares at that time.

In June, the CPP Investment Board announced that it would ultimately invest up to 10% of its assets in private markets. The process involves commitments to external managers who draw down the funds over four or five years as suitable investments are identified.