Mastercard Foundation Enters Secondary Market With Mega PE Deal

On By Littum

(Bloomberg) — One of the biggest buys this year in the secondary private equity market marks the arrival of a major new institutional investor.

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For nearly 20 years, the Mastercard Foundation has been one of the world’s most successful investors, based on owning just one stock: Mastercard Inc. Now it has a new mandate to split that stake, valued at around $50 billion, and diversify into a range of assets.

So far this year, that has meant starting a money management division and attracting talent from some of Canada’s largest pension plans. Now Mastercard Foundation Asset Management Corp., which debuted this year, is buying private equity stakes at a discount.

The board of directors of Eastman Kodak Co.’s pension plan agreed to sell private equity stakes and other illiquid assets worth $764.4 million to the Mastercard Foundation for $550.6 million, according to a regulatory filing. The sale is expected to be completed by the end of the year.

MFAM’s board has a roster of big names in Canadian finance, including Lynn Patterson, a former deputy director of the Bank of Canada, and Jim Leech, who was CEO of the Ontario Teachers’ Pension Plan for more than six years until his retirement about a decade ago. .

The asset manager’s chief investment officer is John Barker, who previously held that role for more than a decade at Mass General Brigham Health System. Prior to that, he was CEO of Harvard Management Co.

Toronto-based MFAM has been on an expansion drive, building its team and attracting employees from OTPP and other Canadian pension plans. Its leaders include Chief Technology Officer Dan Houle and Danilo Simonelli, who joined as CEO after nearly 20 years with Ontario Teachers’.

MFAM is currently Mastercard’s largest shareholder with a stake of around 10%. Barker plans to diversify the portfolio over the next seven years, offloading 13% to 15% of Mastercard shares each year. MFAM will initially work with third-party managers before considering direct investment, Barker said in an interview in May.

Shares donated to the fund around the time of Mastercard’s IPO in 2006 have risen more than 13,000% since then, making it one of the S&P 500’s best performers during that time.