Ontario Teachers’ Pension Plan

(OTPP) is refocusing part of its private investment team to return to its roots of operating companies to drive profit, according to a top investment executive.

“I think the question is, how do you generate returns out of private assets?” Gillian Brown, chief investment officer for public and private investments, said in an interview Tuesday at the Bloomberg Canadian Finance Conference in New York. “For us that means refocusing on the operating-company-level results.”

The Toronto-based pension plan created a department last year to focus on value creation. The team, called Portfolio Solutions, is led by Kevin Kerr, who was the head of the fund’s infrastructure team in the Americas.

It is made up of investment professionals from across different asset classes and works with the deal team from the moment it starts looking at an asset to appraise it, purchase it, extract value over the life of the investment and then sell it.

Brown said the pension is focused on “getting back to old-school private equity, where you’re actually improving operating performance,” versus being focused on financial engineering.

The pension fund in Canada’s most populous province said earlier this year that it plans to lean more on partnerships rather than owning entire firms as it seeks to mitigate risk. The decision was prompted by a prolonged deal drought and the complexities that come with operating companies.

OTPP pioneered today’s standards for the so-called Canadian model in the pension industry more than three decades ago. The model focuses on independent governance, in-house management and long-term wagers.

Bloomberg.com