Canada Pension Looks to Australia With $780 Million to Spend

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The Canadian pension fund OPTrust is looking to invest up to $780 million in Australian private equity and infrastructure assets, according to a report from the Sydney Morning Herald.

The pension fund, which has an office in Australia, is looking to make private equity and infrastructure a larger part of its portfolio. It will be investing directly in both asset classes.

From the Sydney Morning Herald:

OPTrust has one team of 20 professionals working in the private markets group across the globe managing both PE and infrastructure portfolios. Under OPTrust’s long-term strategy, each of these portfolios will eventually account for 15 per cent of the plan’s assets.

The fund invests directly in infrastructure projects, typically taking a quarter or half of a business, and works alongside partners. When investing in private equity, half the program is fund investing and the other half is direct investing.

“We always look to partner so we can cover more asset classes and this helps us broaden our reach,” [OPTrust managing director Stan] Kolenc said. “Also, when you have good partnerships, you make much better investment decisions, you can make better decisions, running the business and when you exit the business.”

Mr Kolenc backs the privatisation of government assets, and says often assets are managed more effectively in private hands.

“We think as a private investor we can still deliver as good or even better quality of service than people had received, often at no more cost,” he said. “The pension fund buys an infrastructure business to hold it on our balance sheet for 20 or 30 or 40 years. We take that long-term view, we know that every dollar we invest in that business we will be around to earn a return on over a long period.”

[…]

“We are also looking at resource infrastructure. You take the risk that commodity volumes continue to flow, and you can get comfortable that certain commodities like ore and gas will continue to flow out of Australia, although its hard to say what the price will be. We focus on assets that operate effectively in today’s volumes and we focus on commodities that are at the lower end of the cost curve … which is how we try to mitigate the risks.”

OPTrust manages $16.3 billion for 85,000 Ontario workers.

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