Ontario Teachers’ Pension Plan is seeking private investments in India and Latin America to diversify its emerging-markets focus beyond China and Hong Kong, said Jane Rowe, head of private equity at the fund.
Canada’s third-biggest pension plan, with C$117 billion ($115 billion) in assets, made its first foray into India by investing in Mumbai-based private-equity firm Kedaara Capital Advisors LLP, Rowe said. Kedaara is led by Manish Kejriwal, formerly of Singapore’s Temasek Holdings Pte., and Sunish Sharma and Nishant Sharma, previously from General Atlantic LLC.
“India’s too big to ignore,” Rowe, senior vice president of Teachers’ Private Capital unit, said in a July 9 interview at her Toronto office. “We should get a snapshot into what’s taking place in the market, and we hope that in working with Kedaara that that will be a good insight into the country.”
Teachers’ is among Canadian pension funds including Caisse de Depot et Placement du Quebec and Canada Pension Plan Investment Board that have pursued transactions outside Canada to diversify beyond stocks and bonds. The funds have been involved in 96 foreign deals totaling $83 billion in the past three years, investing in toll roads, airports and shopping malls, according to data compiled by Bloomberg.
Teachers’ is also looking at investing in private-equity funds in Latin America for the first time. The Toronto-based fund manager, which has C$11.5 billion in private investments primarily in North America, Western Europe and Asia, is “open for business” and has capital to invest worldwide, Rowe said. The buyout fund unit is looking for investments that require between C$75 million and C$300 million of equity.
“We’re looking for pockets of incremental opportunity in places around the globe,” Rowe said. “We have to be open to emerging markets, we have to be open to the displacements that are taking place in Europe.”
Teachers’ Private Capital invests directly in companies or collaborates with other firms on deals, and also backs funds in industries and regions where it doesn’t have a presence, such as India and Latin American countries.
“We’re only just turning our minds to Latin America,” Rowe said. “As a pension plan we’ve done a great job finding a lot of great places to put capital at work in Latin America. Examples include our infrastructure group in Chile, real estate in Brazil, and our relationship investing in Brazil.”
The firm is keeping its “core focus” on North America, where there are “a lot of great companies and great management teams that have value-creation plans that they want to execute,” Rowe said.
North American Investments
Teachers’ Private Capital has about two-thirds of its investments in North America, with stakes in U.S. companies including health-store chain GNC Holdings Inc. (GNC:US) and sports equipment maker Easton-Bell Sports Inc., and collaborated with funds including Providence Equity Partners Fund VI LP and Silver Lake Partners III LP in the past two decades.
Rowe said Teachers’ is also “actively looking” to invest in funds and companies in Europe, where the firm has worked with private equity firms such as BC Partners Ltd. and bought stakes in companies including U.K.-based Acorn Care and Education.
Teachers’ agreed today to buy a 75 percent stake in Norwegian outdoor apparel designer Helly Hansen Group AS from Altor Fund II. The price wasn’t disclosed.
Teachers’ remains active in Canada. Last month, it joined a group including BCE Inc. (BCE), Providence Equity Partners and Madison Dearborn Partners LLC that agreed to buy data-center operator Q9 Networks Inc. for C$1.1 billion. The pension fund is also waiting to close a sale of its majority stake in Maple Leaf Sports and Entertainment Ltd. to Rogers Communications Inc. (RCI/B) and BCE, a C$1.32 billion deal announced in December.
Toronto and London
Rowe, a former executive vice president at Bank of Nova Scotia, was hired by Teachers’ in October 2010 to head its private-equity unit. She oversees about 40 investment staff in Toronto and London.
The private-equity unit, formed in 1991, has an internal rate of return of 19 percent since it began, Rowe said. Teachers’ has invested in more than 300 companies and funds and spent C$23.6 billion in capital since inception, according to its website.
Teachers’ invests and administers retirement savings of 300,000 active and retired teachers in Canada’s most-populous province.
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