LP corner, week of April 12, 2010

Ontario Teachers’ returns rebound in 2009

The Ontario Teachers’ Pension Plan, one of Canada’s top investors, announced last week that the value of its investments bounced back in 2009 after major losses a year earlier, but not enough to stave off a funding shortfall.

Ontario Teachers’ said it had an annual rate of return of 13% last year as confidence returned to financial markets, and reported $10.8 billion in investment earnings.

“We spent 2009 taking care of the business of the plan during the tail end of the financial market crash, while taking advantage of the market turmoil to make some investments that are already starting to pay off, and fortifying the plan for the future,” said CEO Jim Leech.

In 2008, Ontario Teachers’ suffered an 18% investment loss as equity and other holdings were slammed by the global financial crisis.

Leech said that the rebound last year came as confidence returned to markets, but he added that it did not reflect true economic growth.

“We should not expect this kind of market growth going forward,” he said. “In 2008 and continuing into the first quarter of 2009, we saw a crisis of confidence among investors. It caused market mayhem.”

He added that the pension system expects it will still be some time until true economic growth takes hold. —Pav Jordan, Reuters

Oregon nears top of target range with pledges

The Oregon Investment Council, which manages some $68 billion in assets, so far this year has committed $340 million to four private equity funds, pushing its actual allocation to the asset class up near the top of its allowable target range.

Oregon Investment Council’s actual allocation to private equity is 19%, said a spokesperson, which is above its 16% target, and close to the high end of its target range of 12% to 20 percent.

The state investment council made three pledges of $100 million each. One went to the second fund of Avista Capital Partners, which recently closed with $1.8 billion. Avista Capital targets the energy, health care and media industries.

A second outlay went to U.K.-based Lion Capital’s Lion Capital Fund III, earmarked for investments in U.K.-based consumer-related businesses. The firm seeks $2.7 billion for the fund. The third went to Veritas Capital Fund IV, managed by Veritas Capital, a New York-based firm seeking up to $1.25 billion for its fourth fund to invest in mid-market companies that provide goods and services to government-related customers.

Oregon Investment Council also pledged $40 million to OrbiMed Advisors’ $550 million venture fund Caduceus Private Investments IV. OrbiMed, a health care-focused venture firm based in New York, plans to invest primarily in biopharmaceutical and medical device companies in North America and Europe. —Nancy Gordon