CalPERS liked Bentall Kennedy so much it bought the company (or at least a third of it). Shayla Walmsley explores the possible reasons behind the deal.

Back around 2008, Dutch pension funds spotted a previously largely overlooked opportunity. First during the boom, then mid-meltdown, they realised they could get more out of their fund managers than a return. APG was among the pension fund managers to understand that by watching and learning from fund managers - in this case, infrastructure managers - they could over time build up sufficient in-house expertise to invest directly.

The model had already been used by Canadian pension schemes - not least CAD159bn (€127.8bn) pension fund manager Caisse de dépôt et placement du Québec. Caisse subsidiary Ivanhoe Cambridge sold its one-third shareholding in Bentall Kennedy for $100m (€82m) to CalPERS after deciding to bring its advisory business in-house. It may have taken 20 years, but it seems Ivanhoe Cambridge, which declined this week to comment on the deal, had learned enough to go it alone.

CalPERS' intention in acquiring the shareholding is relatively modest compared with those of its Canadian counterparts. Asked to clarify exactly what the pension scheme hoped to learn from Bentall Kennedy, a spokesman for the $236.8bn scheme was keen to emphasise that it was about capacity-building, rather than plotting to bring hitherto outsourced investments in-house. He pointed to the existing partnership stretching back 15 years, and the scheme's "utmost respect for the firm and overall strategy". 

Although the deal will give CalPERS two board seats previously held by Ivanhoe Cambridge, the spokesman said: "Our intentions are not to try and change the strategic direction of the firm but rather be a partner in the firm's long-term strategic direction."

Still, CalPERS isn't exactly taking on the role of the humble protégé. In this case, the partners have written skill-sharing into the deal. "One of our primary goals in this relationship was to leverage their operating experience in real estate management with our own staff," said a spokesman. "It's really about building the internal strength of our own staff [and] learning from them."

The scheme's statement on the deal described it as "a new strategic move" to engage scheme staff with an experienced investment management team, with board member Rob Feckner saying it would give the scheme access to "trends and opportunities". In short, it will be learning asset-level property management in return for ESG smarts - and presumably a favourable overall reduction in fees in future joint ventures.

More joint ventures there are likely to be. CalPERS was reluctant to be drawn on how owning a third of the company might change the contours of future deals, but both the British Columbia Investment Management Corporation (bcIMC) and, while it was a shareholder, Ivanhoe Cambridge took on Bentall Kennedy projects. They include bcIMC's involvement in a four-phase business park development in Winnipeg and a Vancouver office development.

Access to opportunities seems to have been the rationale behind CalSTRS' $800m May acquisition of the 90% shareholding previously held by Lehman Brothers in LCOR, a previous joint-venture partner. The $148.6bn California teachers' pension fund has made clear its intention to increase the percentage of core assets within its real estate portfolio to 50%.

In one sense, the CalPERS plan is a by now familiar spin on the idea of like-mindedness. The other shareholder in Bentall Kennedy, other than its management, is the CAD87bn bcIMC. CalPERS president Joe Dear described the relationship between the two as "mutually beneficial".

But in another, it's a departure from the watch-learn-do model. This, like the CalSTRS deal, isn't a joint venture with an investment manager; it's the acquisition of one. Not that it hasn't been done before - at least at a simpler level. To take a European example, APG recently acquired 6% of India's Lemon Tree Hotels group at the same time that it signed a joint venture with the group on hotel development project. It liked both the project and the company as investment prospects, and saw no particular reason to conflate them.