Teachers’ Private Capital returns 18.6%

The C$130bn pension system’s private equity arm completed 13 direct investments in 2012 and continued making fund commitments to buyout, growth and venture capital funds.

Teachers’ Private Capital, the direct investment arm of the Ontario Teachers’ Pension Plan, generated a return of 18.6 percent in 2012, well above its 13.3 percent benchmark.

The pension’s private equity portfolio produced gross realisations of C$5 billion (€3.8 billion; $4.9 billion) during the year, reinvesting C$3 billion in new and existing investments. Teachers’ Private Capital completed 13 direct investments in 2012 in addition to making several fund investments. The private equity group committed capital to eight new and existing buyout funds during the year and four venture capital and growth funds.

Some of the pension system’s larger private equity transactions during 2012 included the acquisition of Canadian data centre operator Q9 Networks for C$1.1 billion alongside Providence Equity Partners and Madison Dearborn Partners, and a majority investment in sportswear brand Helly Hansen. Although the purchase price for Helly Hansen was undisclosed, Teachers' is understood to have paid in the region of C$332 million for a 75 percent stake in the business.

Teachers’ also acquired a 9.9 percent stake in Kyobo Life Insurance for $400 million in June, marking the pension’s first direct investment into Korea.

Private equity helped Ontario Teachers’ generate an overall return of 13 percent during 2012, growing its total assets from C$117.1 billion at the beginning of 2012 to C$129.5 billion at year end. Real estate was the top performing asset class for pension system, however, returning 19.4 percent.

The size of the private equity investment portfolio shrank slightly during 2012, from C$12.2 billion at the beginning of the year to C$12 billion as of 31 December, 2012.

Teachers’ investment staff added a significant hire early in 2012 when Jo Taylor joined as head of the London office. Taylor, who had been investing privately since his departure from 3i Group in 2008, filled a post that had been vacant since the departure of Ben Hewetson in 2010.