* Net assets rise to C$60.8 bln
* Seeks to diversify beyond N.America, Europe
* Private equity, property, infrastructure power returns
* Alberta energy investment stumbles as oil, gas prices sag
By Andrea Hopkins
TORONTO, Feb 22 Canadian pension fund OMERS said
on Friday it wants to diversify beyond its traditional
strongholds in North America, Britain and Western Europe, but
will remain focused on property, healthcare, infrastructure and
energy assets as it seeks deals around the world.
OMERS, which manages the pension plan for Ontario's
public-sector municipal workers and has become a global
dealmaker by virtue of its deep pockets, said it is just looking
for the right opportunities based on risk and reward.
"We'll be highly focused in terms of the sectors we're
looking at. We have investments in energy, large infrastructure
projects on a world-wide basis, in healthcare and in pipelines,
and we'll continue to look for those kinds of opportunities
around the world for the right risk-return," OMERS chief
financial officer Patrick Crowley said in an interview.
"I don't think we want to restrict ourselves to any one
particular jurisdiction -- we have a large fund and we're very
active and we want to get the best return for our members."
OMERS has been a major buyer of private market assets for
more than a decade, accelerating the pace of acquisitions after
the onset of the global economic crisis of 2008-09.
It said Friday it notched a 10 percent return on investments
in 2012 as its private equity, property and infrastructure
portfolios made strong gains, offsetting losses on its
investment in Alberta's oil and gas sector.
Net assets at the fund grew to C$60.8 billion last year from
C$55.1 billion at the end of 2011.
"The C$5.7 billion increase in our net assets demonstrates
the strength and robustness of OMERS business model with the
capacity to generate growing investment cash yields and more
than ample liquidity to withstand market shocks under stressed
financial conditions," Michael Nobrega, OMERS president and
chief executive, said in a statement.
The Toronto-based pension plan also said it rang up returns
of 19.2 percent in OMERS Private Equity, 16.9 percent in Oxford
Properties, 12.7 percent in Borealis Infrastructure and 7.5
percent in capital markets.
A negative 10.1 percent return in OMERS Strategic
Investments, which represents less than 3 percent of OMERS net
investments, was due to year-end valuations of its principal
assets in Alberta's energy sector as oil and gas prices fell to
their lowest levels in five years.
Crowley said he expects that investment to pay off down the
road, as OMERS benefits from the patience and long investment
horizon that competitors may not enjoy.
"This is an investment where the gas and the oil is still in
the ground, we have the properties, we valued those properties
based on forecasts of prices for next three to four years, but
we believe longer-term this remains a very good investment, and
it is something we're still committed to," Crowley said.
"Not only Alberta but also this sector, and we think this
could be a big opportunity for us to take advantage of people
who may not have liquidity to stay in the business."
The 2012 total investment return of 10 percent far outpaced
the 3.2 percent return in 2011 and edged out the plan's
benchmark return of 9.75 percent, the fund said.
OMERS said it was still working to overcome investment
losses in 2008 stemming from the global financial crisis. Its
five-year annualized rate of return is 3.56 percent, while its
10-year rate of return is 8.24 percent. In the last four years
since the financial crisis, the plan has notched an 8.9 percent
Crowley said OMERS, which competes with sovereign wealth
funds as well as other big pension funds for acquisitions and
investment deals globally, would continue to rely on
partnerships to minimise investment risks in equity deals that
require "quite large" checks to be written.
"We've looked at bringing in people to co-invest along side
with us, and that has worked out reasonably well," said Crowley,
pointing to its move last year to team up with Japan's pension
funds and some major conglomerates to form the world's largest
infrastructure fund to invest in assets such as roads and
airports with greater agility.
"If you have that in place you can take advantage of
opportunities faster, more efficiently, and there is not as much
negotiation among yourselves as to what you are going to bid,
because all of that is settled up front. That is the advantage
of this type of arrangement," said Crowley.
The partnership has been seen as an unprecedented effort to
cut out asset managers as middle men in infrastructure
investment and compete head-to-head with the handful of the
world's biggest funds that have the capacity to lead their own
investments in infrastructure assets.