OMERS reports PE-fueled 12.1% return

The Toronto-based Ontario Municipal Employees Retirement Pension has reported a higher-than-expected return on investments for 2004, crediting the boost to private market investments.

Paul Haggis, president and chief executive officer of the Ontario Municipal Employees Retirement Pension, credited private equity for the fund’s strong 2004 investment returns, which were released Monday.
 
“A significant increase in the returns of our private market investments combined with the continued strength of global equity markets contributed to our strong performance”, Haggis said.   “We are beginning to realize the benefits of our new investment strategy.”

The pension plans to eventually invest 40 percent of the fund in private market assets, including private equity, real estate and infrastructure. 

Senior Vice President David Rogers is head of the private equity fund and co-investment programme investment at OMERS, while Don Morrison and Bruce Hetherington head up the direct investment team. Andre La Forge leads the Borealis Private Equity Fund.

OMERS’ private equity investments posted a return of 12.5 percent, with a total of C$1.5 billion ($1.2 billion; €916 million) invested in the sector. The infrastructure sector saw a return of 31 percent with C$1.3 billion invested, while real estate investments returned 11 percent with C$3.8 billion invested.

The pension announced an overall return of 12.1 percent in 2004, down from a 12.7 percent return in 2003. The fund earned net investment income of C$3.7 billion ($2.9 billion; €2.3 billion), compared to C$3.5 billion in 2003. The fair market value of all net assets grew by C$3.6 billion to C$35.7 billion as of December 31, 2004.

The fund has established a benchmark of 7.6 percent for private equity for 2005. The overall investment benchmark for 2004 was 9.9 percent.

While the return is good news for the pension, The Globe and Mail reports that OMERS’ deficit will double to C$2.5 billion by the end of the year, as previous loses are recognized. 

The Toronto, Ontario-based pension is one of the largest pensions in Canada. It invests for more than 340,000 municipal workers in the province.