OMERS has made its third major exit so far this year with the sale of its stake, alongside Canadian peer AIMCo, in the UK-headquartered Environmental Resources Management, the world’s largest pure-play sustainability consultancy, netting the fund managers a combined profit of nearly US$700 million.
The two Canadian public pension fund managers acquired a majority stake in ERM from private equity firm Charterhouse Capital Partners in 2015 in an off-market deal for an enterprise value of US$1.7 billion. They are selling their stakes to KKR at an enterprise value of US$2.85 billion
At the time of the acquisition, Gordon Milne, a partner at Allen & Overy, which advised OMERS, said the “off market” nature of the transaction “demonstrates the evolution of the approach being taken by Canadian pension funds in Europe and the competition that they are providing for traditional private equity funds.”
The Canadian funds have demonstrated they can add value to business. Since 2015, they have backed organic and M&A-driven growth, with ERM having acquired and successfully integrated 14 complementary businesses.
OMERS also exited Caruna Oy, Finland’s biggest electricity distribution company, last week. It acquired a 40% stake in 2014. Since the investment, the distributor has achieved a 24% carbon footprint reduction and put more than EUR1.4 billion into improving the network’s resilience and replacing ageing assets.
OMERS announced last month that it is selling its minority interest in Vento II, a 596MW portfolio of four wind assets located in Illinois, Texas, Oregon and Minnesota, for approximately US$196.5 million to Atlantica Sustainable Infrastructure. It began investing in the wind generator portfolio in 2012.
In line with a trend seen across state-owned investors, while OMERS has sold relatively high value assets on maturity, it has deployed funds into venture capital with a higher frequency of investments at lower values. OMERS seeks high quality investments, strategic portfolio diversification and active asset management. The Plan has a new CEO since June 2020, during a year when it reported a disappointing -2.7% return.