OTPP private capital unit realizes $5b, reinvests $3b in 2012
Teachers’ Private Capital (TPC), the private equity fund and direct investment arm of Ontario Teachers’ Pension Plan (OTPP), saw $5 billion in gross realizations and $3 billion in reinvestments in 2012, with 13 new direct deals and 12 commitments to new or existing partnerships – eight buyouts and four VC and growth – over the course of the year.
TPC ended 2012 with total assets of $12 billion compared to $12.2 billion the previous year, for an IRR of 18.6% versus a benchmark return of 13.3% - or $500 million added above a $1.5 billion benchmark return. The program has delivered an IRR of 19.2% since its 1991 inception, according to OTPP's annual report.
Real assets, which comprise real estate, infrastructure and timberland, in aggregate totaled $28.7 billion at year end compared to $25.8 billion in 2011, delivering an IRR of 14.7% against a benchmark return of 10.6%.
Total OTPP assets stood at $129.5 billion at the end of 2012, up from $117.1 billion the previous year, with a 13% return for the 12-month period. Investment earnings were $14.7 billion compared to $11.7 billion in 2011. The fund's total value has nearly doubled since 2002.
"Returns earned above our benchmark directly support the goal of pension security and demonstrate the value of our approach to active investing," said Jim Leech, president and CEO of OTPP, in a statement. "The investment team successfully navigated significant risks and turmoil in the global economy again in 2012 to earn an excellent rate of return. Our 10-year annualized rate of return is 9.6%."
Leech, who joined OTPP in 2001 to manage the private equity investment portfolio and rose to CEO in 2007, also announced that he would be retiring at the end of the year.
OTPP, which plans to open a Hong Kong office this year, has 13% of the TPC portfolio deployed in Asia. It has invested in FountainVest Advisors, MBK Partners and Unitas Capital among other Asian GPs.
The pension fund is also arguably the most aggressive direct investor in Asia among the North American pension funds. In the first half of 2012 alone, it teamed up with Hastings Fund Management to acquire a 50-year lease on Sydney Desalination Plant for $2.35 billion and then bought a 9.9% stake in Korea's Kyobo Life Insurance for $398 million.
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