The incoming chief executive of the Canada Pension Plan Investment Board says there will be no change in strategic direction when he takes over next month from Mark Wiseman, the high-profile executive who is leaving after just four years at the helm.
Mark Machin, a veteran of Goldman Sachs who joined CPPIB four years ago to oversee international investment activities, will be the first non-Canadian to lead the organization that invest funds not needed to pay current Canada Pension Plan benefits.
“There’s going to be absolutely no change on strategic direction,” said Machin, a 49-year-old British citizen whose two decades at Goldman Sachs included a six-year stint running the global bank’s investment banking division in Asia, excluding Japan.
“We’ve spent a lot of time as a team here [at CPPIB] over the last four years developing a strategy and a vision for where we want to take the organization out to 2020, and that’s something we developed as a team and are going to continue to execute on as a team,” Machin said.
He acknowledged that his management style is not likely to be the same as Wiseman’s.
“We’re different people, so I’m sure we’ll have slightly different personal styles,” he said.
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The changing of the guard was triggered by Wiseman’s decision to take a senior job at global asset manager BlackRock just four years into his expected five to seven-year term as chief executive.
Wiseman, 46, will give up his title and operational role at CPPIB on June 13. He will remain on call until Sept. 5, but only as a senior adviser to the board of directors.
As the Post first reported Wednesday, the leadership transition is a departure from the one involving Wiseman and his predecessor, David Denison, in 2012, when both men remained at CPPIB full-time during the four-month handover.
In an interview, Wiseman said it was “an incredibly difficult decision” to leave the pension giant, and one he thought about for a while.
He brushed off any suggestion of discord within CPPIB, either about his management style or the costs of running the fund, and said the move was driven by the “compelling” opportunity to work at BlackRock, the world’s largest asset manager.
Wiseman starts his job there in September as a senior managing director and member of the global executive committee. As head of global active equity, he will oversee more than 350 portfolio management and business professionals across the Americas, Asia and emerging markets and be responsible for more than $275 billion in equity-based investment strategies, BlackRock said in a statement Thursday.
A news release issued by CPPIB said Wiseman informed the board early this year of his plans to pursue the job at BlackRock.
“While Mark Wiseman leaves big shoes to fill, the Board of Directors is confident that Mark Machin will do so in an impressive fashion,” Heather Munroe-Blum, chairperson of the CPPIB board, said in statement.
“In his time with the organization, Mark Machin has earned the trust, respect and admiration of employees and partners alike.”
The handover comes a decade into CPPIB’s transition to active management, which has been marked by a series of large, private deals and geographic diversification. The strategy is intended to boost returns from the previous strategy of passive investments in public markets.
Wiseman said the change in strategy has led to “net value-added” returns of $17.1 billion, including results from the latest fiscal year, which were reported Thursday.
The fund had net assets of $278.9 billion as of March 31, the end of the latest fiscal year, up from $264.6 billion a year earlier.
Net investment income for the year was $9.1 billion, with a net rate of return of 3.4 per cent in spite volatile global equity markets.
“Over the past 12 months, despite one of the more challenging investment environments in recent years and predominantly negative equity markets, the CPP Fund generated a modest gain,” Wiseman said. “This year’s results highlight the real-time impact of short-term market volatility, reinforcing why we focus on long-term results.”
The pension management organization said Thursday that 57 per cent of the fund’s cumulative assets are the result of investment income.
In the 10-year period to the end of fiscal 2016, CPPIB contributed $125.6 billion in cumulative net investment income to the Fund, after all the investment board’s costs, and $160.6 billion since the Fund’s inception in 1999.