Infrastructure is usually seen as a safe bet by the patient capital of state-owned investors, and a bolt hole at times of uncertainty and economic volatility.

Yet, Canada’s US$96 billion Ontario Municipal Employees Retirement System (OMERS) has had its fingers burned with a loss on its investment in the Czech Republic’s gas transmission operator Net4gas.

The government has moved to renationalise the country’s gas transmission operator Net4gas at a cost estimated to be about 5% of what the government received in 2002 during its privatization.

The country’s Ministry of Industry and Trade said the state-run electric utility CEPS signed an agreement to purchase Net4gas from OMERS subsidiary Omers Infrastructure and Allianz Infrastructure Luxembourg for CZK3 billion (US$129 million) in two instalments with closure expected in Q1 2024. OMERS began investing in Net4Gas in 2013, when it bought the operator from German utility company RWE, alongside Allianz, for US$2 billion.

Net4gas has suffered the consequences of the Russian invasion of Ukraine, when Russian gas giant Gazprom slashed gas transit across Ukraine. Before February 2022, Gazprom transported 45 billion cubic metres (bcm) of natural gas per annum, of which 8bcm was bought by Czech Republic. Net4gas subsidiary Brawa owns the pipeline that connects the gas network to Germany.

Industry and Trade Minister Jozef Sikela called the renationalization “another step towards strengthening energy security”, adding “energy can also be misused as a weapon. There is no substitute for Net4gas. If we want to import gas to the Czech Republic, the company will be in charge of it. In this way, we are buying the basic building block of Czech energy security.”

OMERS’s big sister the US$189 billion Ontario Teachers Pension Plan (OTPP) had better news with the sale of a 49% stake in SeaCube Container Leasing to Wren House Infrastructure Management, the London-based infrastructure subsidiary of the Kuwait Investment Authority (KIA). SeaCube is one of the largest operating lessors of intermodal containers in the world.

OTPP took the company private in 2013 for a total equity value of US$470 million and an enterprise value (including assumed debt) of US$1.8 billion. Neither OTPP nor KIA disclosed the value of the transaction, but Bloomberg reported the deal would value the company at up to US$1 billion including debt. Under the terms of the deal, OTPP and Wren House will operate under a co-control structure of the container leasing company.

In 2022, OTPP reported an annual return of 4.0%, a fraction behind OMERS which notched up a 4.2% return. OTPP’s best performing asset class that year was infrastructure with an 18.7% return, against benchmark growth of 15.1%. OMERS also performed well in infrastructure investments, gaining 12.5% (above the 7.7% benchmark).

Related funds OMERS OTPP