Healthcare of Ontario Pension Plan, which recently installed Lori Hall-Kimm as its new private equity chief, saw strong performance coming out of last year’s robust deal market.
The C$114 billion ($90 billion) HOOPP earned a one-year net return of 23.7 percent from its PE investments in 2021, according to an annual report released this week. This topped a 10.5 percent return in 2020.
At the end of December, HOOPP Capital Partners, the pension system’s PE arm, had invested C$13.7 billion across a range of funds, companies and other assets. A further C$7 billion was committed to investments.
HOOPP has in the past decade focused more on direct and co-investments as a way to generate better returns net of fees and carry. This puts it in a small group of mid-sized and large Canadian institutions that are emulating trail-blazing peers like CPP Investments by setting up in-house capabilities for making and overseeing these investments.
Direct activity was accelerated under the leadership of Jim Walker, ex-head of private markets and a one-time general partner. Before joining HOOPP, he co-founded and was managing director of Clearspring Capital Partners.
The global strategy today emphasizes investing in privately-held businesses as well as committing capital to PE and private debt funds, according to the annual report. Like other large pension systems, HOOPP appears to select fund partners in part to gain access to direct opportunities. It also seeks out other opportunities, such as making credit and structured equity investments.
Roughly 37 percent of existing PE portfolio assets were direct and co-investments at the end of December, HOOPP told Buyouts. The balance was accounted for by funds.
HOOPP has typically kept a low profile when dealmaking. Transactions in which it invested include this year’s C$210 million financing of financial technology provider Koho and $100 million financing of medical diagnostic provider Visby. It also last year supplied debt financing to back the employee ownership of Taylor Guitars, a maker of acoustic guitars.
Despite its low profile, HOOPP grabbed headlines in 2018 with the acquisition of a minority stake in Chobani, a leading Greek yogurt brand. The deal gave an exit to TPG, which four years earlier invested $750 million.
In January, Hall-Kimm stepped into HOOPP’s top PE role. She brings more than 15 years of market experience, including as managing director, direct private equity, at CPP Investments, and as a director in the private capital team of Ontario Teachers’ Pension Plan. Before, she was an associate in Goldman Sachs’ investment banking unit.
HOOPP, the retirement plan for 420,000 Ontario healthcare employees, is among a number of Canadian pension systems that showed outsized PE performance in 2021. Ontario Teachers’ this week announced earning a one-year net return of 29 percent, compared to a 13.5 percent return in 2020.
In addition, Caisse de dépôt et placement du Québec in February reported generating a 39.2 percent one-year net return against a 2020 return of 20.7 percent. In the same month, OMERS said it realized a 25.8 percent net return versus a 2020 return of negative 8.4 percent.