Ontario Municipal Employees Retirement System, a pension fund manager in Canada’s most- populous province, posted a 10 percent return on investments last year, led by private equity and real estate.
Net investment income rose to C$5.2 billion ($5.1 billion) from C$1.36 billion in 2011, the Toronto-based fund manager said. Omers, as the fund is known, managed C$60.8 billion in assets as of Dec. 31, up from C$55.1 billion a year earlier, Omers said today in a statement.
“We’ve had a reasonably good year in terms of our returns,” Michael Nobrega, chief executive officer, told reporters in Toronto.
Omers benefited from higher returns from its holdings in real estate, private equity and infrastructure, as well as investments in stocks and bonds. The fund beat the 9.4 percent median return of Canadian pension funds for 2012, based on a Jan. 29 report by Royal Bank of Canada’s RBC Investor Services unit.
Returns from private equity were 19 percent, while its Oxford Properties real-estate unit had a 17 percent return. Infrastructure investments returned 13 percent, according to the statement.
Omers Capital Markets, which oversees investments in stocks, bonds and other debt investments, had a 7.5 percent return, the fund manager said. Canada’s benchmark S&P/TSX Composite Index (SPTSX) rose 4 percent while the MSCI World Index rose 13 percent in 2012.
Omers Strategic Investments, which focuses on venture capital and Western Canadian energy assets, lost 10 percent after its holdings in Alberta’s oil-and-gas sector fell with declining energy prices.
Nobrega sees “tremendous” opportunities for Omers to pursue takeovers of junior oil-and-gas companies as those firms face difficulties financing existing assets and projects amid lower oil prices.
“We’ve had more opportunities in the last two weeks than we’ve had in three years,” Nobrega said. “There are opportunities for the acquisition of oil-and-gas properties, both in Saskatchewan and in Alberta.”
Omers said its deficit increased to C$9.9 billion in 2012 from C$7.3 billion a year earlier. Omers manages pensions for 429,000 retired and active municipal employees in Ontario.
Omers isn’t associated with any casino company seeking to bring a gambling center to Canada’s most-populous city, Nobrega said. Omers owns the Metro Toronto Convention Centre, one of the potential locations cited for such a facility.
“We will not invest in a casino, we will not own the casino,” Nobrega said. “If somehow it comes to the Metro Convention Centre, it’s simply a piece of land allocated to a casino operator whom we have done a deal with.”
Nobrega said he doesn’t think Toronto would approve a casino.
Nobrega also said he’s frustrated by government legislation that oversees Canadian pension funds, particularly a rule that limits the pension managers from holding more than 30 percent of the votes to elect company directors.
“Everybody preaches that the pension funds in Canada do a very good job internationally, but we are governed by legislation that is totally inadequate,” Nobrega said.
Omers has been lobbying for 10 years to change the so- called 30 percent rule, Nobrega said.
“We’re uncompetitive because we’re not governed by the same rules, and we have to twist ourselves like a pretzel to make sure we can make international investments,” Nobrega said. “It’s very, very difficult.”
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