Direct-focused OMERS opens in New York

The C$53bn pension system has been expanding its reach beyond Canada as it works to become a direct private equity investor, moving away from making external fund commitments.

The Ontario Municipal Employees’ Retirement System, with more than C$53 billion (€38 billion; $53 billion) in assets, has officially opened its New York office as it works to expand its focus as a direct private equity investor throughout the world.

The pension system’s private equity arm, OMERS Private Equity, as part of its strategy shift from passive to direct investor, had already expanded into temporary space in New York in 2009. The system moved Mike Graham, senior managing director, to run the New York office at the time.

The first office space, which also housed the pension’s real estate arm, Oxford Properties Group, consisted of seven employees.

The new office “marks a significant expansion of both OMERS Worldwide’s New York office space and its investment team … the move is in line with direction from the OMERS board that an expanded presence in New York is essential to access key private market investments in the US”, OMERS said in a statement.

OMERS has C$10 billion invested in the US in public and private markets. Earlier this week, the pension system’s private equity team announced the acquisition of Michigan-based Great Expressions Dental Centers from Audax Group for an undisclosed amount.

The team has been focused almost exclusively on making direct private equity investments over the past several years, moving away from committing capital to managers. “We are focused almost solely on direct investing only,” Graham told Private Equity International in a prior interview. “That’s been the case for at least the last 24 months.”

OMERS’ goal is to have 80 percent of the private equity portfolio in direct investments, and 20 percent in external fund managers. OMERS’ Private Equity’s portfolio is roughly split about 57 percent in fun d investments and 43 percent in direct investments as of March.

OMERS PE reported its 2010 earnings earlier this year, revealing a return of 22.2 percent, a big boost from the 13.9 percent return in 2009.