Ontario Teachers’ Pension Plan lands in Asia

18 September 2013   Category: News, Asia, Hong Kong   By Hui Ching-hoo

Ontario Teachers’ Pension Plan (OTPP) is looking to increase its presence in Asia with the official launch of its first Asian office, in Hong Kong. 
The Toronto-based pension giant set up its Asian subsidiary Ontario Teachers’ Pension Plan (Asia) on September 5 with the formation of an investment team comprising three portfolio managers. 
Wayne Kozun, senior vice president, public equities at Ontario Teachers’ Pension Plan (Asia) notes that the launch displays the fund’s long-term commitment to the Pan-Asia market. 
OTPP’s direct investment portfolio encompasses infrastructure, long-term equities, teachers’ private capital, as well as relationship investing – an approach that makes large, strategic investments in companies around the globe, then works closely with those companies to increase shareholder value.  
Jane Rowe, senior vice president, teachers’ private capital at Ontario Teachers’ Pension Plan (Asia) notes that the pension fund currently has around C$12 billion (US$11.6 billion) in private capital. Fifty percent of that has been utilised in the form of direct investment in companies with the remainder invested via its private equity partners. 
The pension fund has set aside C$1.5 billion for allocations to regional private equity funds, and has earmarked another C$1 billion to commit to those private equity funds, which may offer additional attractive opportunities for investment.
“We’re investing in funds specialised in particular regions or specific industry sectors,” she adds. “And we hope they can create core investment opportunities for us.” 
Mr. Kozun notes that OPTT also has a China focus, with a US$300 million QFII allocation. The pension fund has already placed the first US$100 million and is in the process of placing the remainder. 
In 2012, it outsourced a Greater China equities mandate and an Asia ex-Japan equities mandate to two external managers. 
Mr. Kozun notes that the fund’s public equities portfolio has around C$60 billion in assets. Its investment strategy has no home bias, with the majority of the assets being overseas securities.          
OTPP is one of the world’s largest single pension plans with total net assets of C$129.5 billion as of the end of 2012. The pension fund has realised a total return of 10.1% since its inception in 1990, against a return of 7.9% for its benchmark during the same period. The fund’s portfolio has a wide array of asset classes: equities, fixed income, and real assets make up of 47%, 48% and 23% of its net investments, respectively.