Private Equity Leads Return Rate for OMERS, VC and Strategic Investments Turn Profitable

Private equity led the way for diversified investment giant OMERS in 2013 but its venture capital branch also saw strong performance, with OMERS Strategic Investments —which includes OMERS Ventures—swinging to profitability from a loss last year.

The pension fund, also known as the Ontario Municipal Employees Retirement System, released its 2013 results on Monday.
In total, OMERS generated $4 billion in investment income pushing its total assets to $65.1 billion.

The Strategic Investments branch generated $181 million, a 9.1 per cent rate of return on the $2.5 billion in investments it had last year.

Founded in 2009, OMERS Ventures has been involved in Canada’s largest two VC rounds. It was an existing investor in HootSuite an participated in that company’s $165 million Series B. It was also a lead investor in Shopify’s $100 million series C.

Despite the size of those investments, VC isn’t driving returns for OMERS; it says its investment in a Calgary-based oil and natural gas production company produced the largest return for the Strategic Investments branch. That may have something to do with the short time-frame since the fund began making VC investments, which normally only generate returns on a market exit.

Still, the results are good news, OMERS Strategic Investments lost money last year, generating a rate of return of negative 10 per cent.

Overall, the fund’s Private Equity branch had the highest rate of return, generating $1.4 billion on $7.1 billion in investments, a 23.6 per cent rate of return. That’s up from 19.2 per cent in 2012. The Private Equity fund has a diversified portfolio with everything from software and IT outsourcing companies to retirement homes and snack foods.

The company’s traditional investments in capital markets are it’s largest, that area had the lowest rate of return, 0.5 per cent or $200 million. OMERS blamed that on a shift to a new investment strategy.

OMERS also has a real estate arm, Oxford Properties and an infrastructure investment branch, Borealis Infrastructure.