Ontario Teachers’ Pension Plan Board’s infrastructure portfolio helped the C$244.1bn (€170.2bn) Canadian pension fund’s returns in 2022 to exceed its benchmark.
Ontario Teachers’ recorded a one-year total-fund net return of 4.0% for the year ended 31 December compared with the anticipated 2.3% return.
The performance was mainly driven by the pension fund’s private equity, infrastructure and credit asset classes, all of which Ontario Teachers’ said meaningfully outperformed their benchmarks, partially offset by real estate and public equity which underperformed their benchmarks.
During the period, the pension fund’s C$39.8bn infrastructure portfolio recorded an 18.7% return compared with the benchmark’s 15.1% return. Infrastructure returned 7.9% in 2021 versus the benchmark’s 1.2% in the same period.
Infrastructure investments made during the period included the acquisition of a 25% stake in SSE’s electricity transmission network business in a £1.5bn (€1.7bn) deal; buying a 70% interest in Spark New Zealand’s mobile towers business for NZ$900m (€548.5m); a partnership with Mahindra Group to acquire a significant stake in Indian renewable energy firm Mahindra Susten; teaming up with Corio Generation to finance the development of 14 offshore wind projects and acquiring listed Chilean power transmission company Enel Transmisión Chile.
In 2022, the pension fund’s C$28.1bn real estate portfolio’s return was -3.5% compared with 6.7% in the same period for its benchmark. In the year before, real estate recorded a 2.5% return compared with 8.8% for the benchmark in the same period.
Real estate deals in 2022 included the pension fund’s property arm Cadillac Fairview partnering with Thomas White Oxford to deliver the £700m global innovation district in the UK known as Oxford North; Cadillac Fairview committed an additional US$700m (€650m) to US life sciences real estate developer IQHQ, following an initial $500m investment in November 2020.
Cadillac Fairview and Boreal IM also acquired three logistics assets in the UK, 15 warehouses across four regions in the Netherlands, and two industrial parks in West London in the UK and in the Port of Rotterdam, Netherlands.
Jo Taylor, president and CEO of Ontario Teachers’, said: “We delivered positive results for our members in 2022, leveraging our portfolio diversification and flexible asset allocation capabilities in a difficult investment environment. Our relative investment performance in 2022 was impressive, as many public equity and fixed income indices experienced double-digit losses during the year.”
Ziad Hindo, Ontario Teachers’ CIO, said: “Our diversified portfolio demonstrated resilience in 2022 with excellent returns from our infrastructure, inflation sensitive and private equity assets.
“The changes made to the portfolio over the past few years addressed many of the challenges of high inflation. Assets correlated to inflation such as commodities, natural resources and infrastructure all performed well last year.”
Ontario Teachers’, which ranks ninth on the IPE Real Assets Top 100 infrastructure investors 2022 rankings, expects to reach C$300bn in net assets by 2030.
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