Ontario Teachers eyes special sits funds

The Canadian pension’s director of funds says it is time to prepare to take advantage of an upcoming downturn.

Ontario Teachers’ Pension Plan (OTPP), a Toronto-headquartered Canadian pension plan, is looking at special situations fund investment opportunities, according to Olivia Ouyang, a Hong Kong-based director of funds at the pension plan.

Speaking at the HKVCA China Private Equity Summit 2018 on key concerns for limited partners in today’s investment environment, she told industry participants that the pension plan is looking at special situations funds as a way to prepare for a downturn.

Within its private equity portfolio, OTPP has 70 percent of its private equity assets invested in direct deals and 30 percent in funds, according to Ouyang.

“What we are trying to do is really bottom down our operations of the portfolio companies, making sure that we have the right management in place, making sure that we actually put any financing facilities in place with the lite-covenants. Should there be any financial downturn, then [there will be] cash flow issues,” she noted.

Among OTPP’s transactions in the region, it disclosed its investment partnership with the Pure Group, a Hong Kong-headquartered fitness chain on 18 December, 2017. The Canadian pension formed a consortium with FountainVest Partners, a Hong Kong-based private equity firm. The terms and conditions were not disclosed.

Additionally, OTPP is looking to take advantage of frothy valuations on the private equity side and sell minority stakes in  portfolio companies to realize some gains. “Everything is fully priced that there is not much dislocation [in the region],” Ouyang added.

OTPP announced on 14 March that Datuk Ben Chan was appointed as a Hong Kong-based regional managing director for Asia Pacific, effective on 1 June. He co-headed the investments team of Khazanah Nasional Berhad, the Malaysian sovereign wealth fund, and led its investment activities in China, according to the statement.

The pension plan had seven percent exposure to credit, according to its latest disclosure of its asset mix as of 31 December 2017.