OMERS PE returns 22.2%

The Toronto-based pension fund’s private equity platform returned 22.2%, beating last year's returns but underperforming its benchmark.

The Ontario Municipal Employees Retirement System's private equity portfolio's returns soared in 2010 to 22.2 percent, beating its 13.9 percent return in 2009, but still coming below the pension's ambitious 28 percent benchmark for the asset class. 

The private equity programme, which manages more than $4 billion globally, includes a mix of direct and fund investments. The pension has been steadily increasing its direct investment exposure and paring back on fund commitments. 

OMERS opened offices in London and New York to boost its direct investing capabilities, and its ultimate goal was to have 80 percent of its portfolio in direct investments and 20 percent in fund investments. 

“OMERS very much believes in active management in terms of adding value to the investment process more so than passive management,” Paul Renaud, president and chief executive officer of OMERS Private Equity, told PEI in a past interview. “We have the size, scale and resources we've been building up over time to build up a direct [investment] programme.”

Earlier this year, OMERS PE bought community healthcare provider CBI Health Group from private equity firm Callisto Capital. OMERS partnered with management on the deal. Last year, OMERS PE bought the United States Infrastructure Company, a utility contracting company, from Kohlberg Kravis Roberts. OMERS did not disclose terms on either deal. 

OMERS total fund rate of return was about 12 percent, up from 10.6 percent in 2009. The overall return was also driven by positive returns in real estate, which beat its benchmarket by 0.86 percent, and infrastructure, which outperformed by 1.6 percent. 
  
OMERS' real estate arm, Oxford Properties, a real estate development and investment management business formed in 1960 and which has a real estate portfolio of approximately $16 billion, returned 7.51 percent in 2010, ahead of its benchmark of 6.65 percent. The result was also up on its 1.3 percent return in 2009.
 
Borealis, Canada’s first established infrastructure business formed by a pension fund, returned 10.1 percent, up on its 8.5 percent benchmark but down on its 10.9 percent return last year. The company has invested approximately C$7 billion (€5.2 billion; $7.1 billion) in the asset class since its inception in the late 1990s, which it values today at about C$70 billion. 
 
OMERS said its net assets had exceeded C$53 billion in 2010, C$10 billion up since the global financial crisis and C$5.5 billion up from 2009. The increase was due to the pension's increased exposure to private markets, OMERS said in a statement.