The Canadian public pension fund – with CAD 53 billion in assets – saw a total return of 12.01% in 2010, compared with 10.6% in 2009. Of the asset classes invested in by the pension fund, private equity returns were the most significant last year, returning 22.2% for the period up from 13.9% in 2009. In the last few years, OMERS has looked to increase its exposure to private market investments, including asset classes such as private equity, which it believes will generate strong, predictable returns and consistent cash flow with reduced risk to meet its funding requirements. As of December 2010, its split between public market and private market investments was 60.1% and 39.9%, which included a CAD 6.7 billion allocation to private equity. In the long run, however, it is targeting a 53%-47% split.
OMERS’ private equity activity includes direct investments into companies as well as indirect exposure through investment in third-party funds. OMERS sees the latter activity, which constitutes around 61% of its total private equity portfolio, as an opportunity to bolster investment relationships, access venture capital and growth capital investments and gain exposure to geographies which it cannot reach directly. It seeks to actively co-invest with fund managers, and prefers working with those with a proven track record of exceptional performance.