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OMERS Net Assets Clear $60 Billion in 2012 with 10% Investment Return

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The press release states, “OMERS, one of Canada’s largest pension plans, today announced its 2012 financial results. OMERS net assets grew to $60.8 billion, rising by $5.7 billion in 2012 and by over $17 billion since the 2008 global credit crisis. Now in its 50th year, OMERS is an active, diversified investor, pension innovator, and an engine of economic growth and employment in Ontario and Canada.

OMERS total Plan investment return of 10% was driven by strong performance in its private market portfolio and solid public market performance in line with expectations and current market conditions.

“OMERS had a strong year in 2012. The $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,” said Michael Nobrega, OMERS President and CEO.

OMERS private market portfolio had a 13.8% investment return – with returns of 19.2% (OMERS Private Equity), 16.9% (Oxford Properties), 12.7% (Borealis Infrastructure) and negative 10.1% (OMERS Strategic Investments). OMERS Strategic Investments, which represents less than two and a half per cent of OMERS net investments, has its principal assets in Alberta’s oil and gas sector. The year-end valuation of these assets was negatively impacted as oil and gas prices fell to their lowest levels in five years.

OMERS Capital Markets, which manages the public market portfolio including public equities, fixed income and debt investments, generated a 7.5% return.

Progress against Strategic Goals
In 2003 OMERS adopted its current strategic plan including an investment strategy designed to provide balance between public and private market assets and to generate long-term, stable cash flows while maintaining liquidity. The strategy has evolved to incorporate avenues for the growth of Plan assets and a “direct-drive” ownership model providing OMERS with greater control of its investments at a lower cost.

“As a pension plan we are focused on our ability to pay pensions to our members over the long term in spite of factors such as the increasing average age of Plan members, low interest rates and volatility in the public equity markets. Our strategy is continuing to evolve to provide us with a fortress-like balance sheet that enables the growth of our assets while maintaining the necessary liquidity to withstand market disruptions,” said Mr. Nobrega.

One of the key drivers of the strategic plan is OMERS asset mix. OMERS ended the year with 60% of its assets in the public markets and 40% in private market assets, compared with 82% public and 18% private before the new strategy was implemented nine years ago. Our long-term goal is to achieve a mix of approximately 53% public and 47% private market investments.

A second key driver is the strategic priority to directly own and actively manage investments rather than retaining external fund managers. OMERS ended the year with 88% of the portfolio now managed in-house, up from 74% five years ago. The long-term goal is to reach 95% of the portfolio managed internally.”

Read more: OMERS Press Release

SWFI First Read, December 17, 2018

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Illinois Teachers’ Retirement System Partially Pulls Back on Risk Parity

The Illinois Teachers’ Retirement System pulled back on risk parity strategies. The pension reduced the US$ 455 million risk parity part of AQR Capital Management’s Multi-Strategy XIV. AQR still manages a substantial portion of the pension’s assets at an estimated US$ 2.4 billion. In addition, the pension redeemed US$ 300 million of the US$ 522 million from Bridgewater Associates’ All-Weather risk-parity strategy. Bridgewater Associates continues to run over US$ 450 million for the pension fund.

Qatar Petroleum Inks Deal with Eni on Mexican Oilfields

Qatar Petroleum signed a deal with Italy’s Eni S.p.A. to purchase a 35% stake in three offshore oilfields in Mexico. Qatar Petroleum is getting interests in the Amoca, Mizton and Tecoalli fields in Area 1 of the Campeche Bay complex. Qatar Petroleum already holds a number of positions in Area 1 as being a member of the Shell-Eni consortium. Post-transaction, Eni and Qatar Petroleum will have 50:50 ownership over Area 1 of the Campeche Bay complex. The deal needs final approval from the Mexican government.

Saudi Fund for Development Reschedules Some Jordan Loans

Jordan remains stuck in an economic crisis. The Saudi Fund for Development and Jordanian government inked a deal to reschedule US$ 114 million worth of loans owed to the Saudi fund. The debt pool consists of 19 due loans that will be settled over a period of 20 years, with a grace period of 5 years. The Saudi Fund for Development has contributed to the financing of 20 economic and social projects in Jordan from 1975 to 2017, with a value estimated at US$ 488 million.

Jabre Capital Closes Three Funds to Outside Capital

Geneva-based Jabre Capital Partners SA is returning client assets in three funds managed by Philippe Jabre due to a challenging year in 2019. Jabre Capital Partners will still run two funds with external capital, a European credit fund and an emerging markets fund.

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Reuters Pension Fund Finalizes Buy-in with Canada Life

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U.K. corporate pensions continue to derisk by selling off risk to insurance entities. The Reuters Pension Fund is based in Sheffield, United Kingdom. The corporate pension fund insured £625 million in liabilities through a buy-in with Canada Life Financial Corporation. This was the largest risk transfer deal conducted by Canada Life.

Law firm Sacker & Partners advised on the risk transfer, while investment consultant Redington advised.

The Reuters Pension Fund has £2.3 billion in assets. Greg Meekings is the chairman of trustees for the Reuters Pension Fund.

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Chan Zuckerberg Initiative Hire its First Chief Investment Officer

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The Chan Zuckerberg Initiative (CZI) hired its first chief investment officer. The US$ 10 billion philanthropic vehicle hired David Lee to be its CIO. The search process was conducted by New York-based recruiting firm David Barrett Partners. Lee spent the last eight years working at Princeton University’s endowment – holding the managing director position as his final station. Lee got his MBA at Yale University.

According to the CZI press release, “In this role, Lee will be responsible for managing an investment portfolio that will grow the organization’s ability to fund its efforts across its three core Initiatives – Science, Education and Justice & Opportunity. CZI is a new kind of philanthropic organization that pairs engineering with grantmaking, impact investing, policy and advocacy work, in order to help build a more inclusive, just, and healthy future for everyone.”

Lee will report to an investment committee which is led by Yale University CIO David Swensen. Other investment committee members of CZI include Lei Zhang, Founder and CEO of Hillhouse Capital; Matt Cohler, General Partner of venture capital firm Benchmark; and Carter Simonds, a former Managing Director of Blue Ridge Capital – a hedge fund investor.

Photo Credit: CZI

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