As Pensions Continue to Pursue Infrastructure, Ontario Teachers’ Acquires Parking Service

Just one week after increasing its airport holdings, the Ontario Teachers’ Pension Plan has acquired Impark, the third largest parking service company in North America, in a move indicative of pension funds’ increasing interest in infrastructure.

(July 27, 2011) – The Ontario Teachers’ Pension Plan (OTPP) has made another investment in the infrastructure market, acquiring Babcock & Brown Gates Parking Investments LLC (BBGPI), the fund announced yesterday.

The move comes at a time when infrastructure investments are increasingly popular among pension funds. Last week, aiCIO reported on a Preqin study that revealed increased closings and more ambitious funding goals for infrastructure funds.

BBGPI’s flagship holding is Imperial Parking Corporation (Impark), the third largest parking service company in North America. The Vancouver, British Columbia-based company manages over 400,000 parking spaces in more than 2,000 locations in 25 different markets.

The deal, the terms of which are not being released, was headed by OTPP’s long-term equity group. The group focuses on investments with low risk, long-term growth potential, and a steady cash flow.

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Lee Sienna, OTPP’s Vice-President of Long-Term Equities, commented on Impark’s strong fit as an investment for the group. “Impark has established a very strong position within the parking and real estate sectors. As a market leader, it is an excellent fit with our investment criteria of providing reliable income streams, consistent performance and growth opportunities. We look forward to partnering with the Impark management team to continue building the company in Canada and achieving new expansion in key U.S. markets.”

The excitement over the growth prospects stemming from the deal is mutual. Allan Copping, Impark’s CEO said, “We are extremely optimistic about the benefits of Teachers’ investment…The new partnership with Teachers’ will allow Impark to further invest in the technology, processes and people that enable us to deliver innovative parking solutions to our clients and customers. As Impark enters its 50th year, the company is well positioned to develop its core strengths and continue its sustainable growth.”

Impark’s senior vice-president of business development, Julian Jones, also expressed optimism for the deal and its ability to help Impark remain on the cutting edge of parking technologies. Jones noted that Impark hopes to build on pay-by-phone technology and electronic metering by adding smart phone applications and other technologies in the near future, according to an article from the Vancouver Sun.

This deal comes just one week after OTPP made an agreement with Australian airport holder MAp to acquire major stakes in the Copenhagen and Brussels airports. The deal strengthens OTPP’s place as an industry leader in infrastructure investments.

This agreement is not the first time that the acquisition or sale of parking garages has been proposed for pension funds. In January, aiCIO reported that Pittsburgh mayor Luke Ravenstahl supported selling city parking garages and spaces to raise $220 million to help fund the city’s troubled pension fund.

To contact the aiCIO editor of this story: Justin Mundt at <a href='mailto:jmundt@assetinternational.com'>jmundt@assetinternational.com</a>

Mercer has created and appointed a global chief investment officer focused on mainstream assets for its investment management business, signaling that the growing trend toward discretionary consulting is not slowing down.

(July 27, 2011)—Mercer has created a new global chief investment officer of mainstream assets and appointed Russell Clarke, the consultant’s current chief investment officer for Asia Pacific, to the position, indicating that Mercer is increasingly focusing on growing its investment management business.

Mercer’s move underscores the recent trend that consultants have undertaken towards offering more discretionary consulting—which involves implementing investment decisions on behalf of clients as opposed to simply offering advice. The creation of the global chief investment officer position indicates that Mercer is serious about expanding its $44 billion investment management business.

“Our business is growing rapidly – both in terms of assets under management and the range of investment strategies we’re bringing to market in response to client needs,” Andrew Kirton, Mercer’s London-based Global CIO, said in a release. “As we evolve our portfolio management activities to an increasingly global footing and integrate it more closely with the underlying strategic and manager research that underpins it, the need for a pivotal leadership role in managing the challenges of the growing scale and complexity has become apparent.”

In the position, Clarke will oversee all portfolio management activities with mainstream assets such as equities, property, fixed interest and multi-asset portfolios within Mercer’s investment management business.

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Many consultants have made significant moves into the discretionary consulting space in recent months. In June, Cambridge, Massachusetts-based NEPC announced that it was belatedly entering the field where many of its competitors including Russell, SEI, Wilshire, and Mercer were already present.

“We’ve been forced to look into this business for many years now,” NEPC’s Steve Charlton told aiCIO when asked about what spurred the decision to move into the space. “A lot of our clients are choosing to go the outsourcing route. For many years we felt it wasn’t that big of a deal,” he said. “But that started to change last year when we received more requests for proposals (RFPs) asking for discretionary services.”

Consulting firms are embracing discretionary consulting because it provides a much more robust revenue stream than simply providing advice to clients. Though the upfront cost for creating discretionary units is high and the units sometimes take years to become profitable, the long-term benefit of charging higher fees is greatly appealing to consultants.

The decision for asset owners to outsource investment decisions is less clear-cut. While the ability to defer investment decision-making to a professional and well-known consultant is appealing, potential conflicts of interest between the asset owners and their consultants have made the transition difficult.

Click here to read “Consultant Corner: Investment Outsourcing” from aiCIO’s summer issue that discusses the allure and the possible pitfalls of investment outsourcing. Click here to watch KC Connors, a partner at consulting firm NEPC, speak with aiCIO about the firm’s decision to offer discretionary consulting services.

To contact the aiCIO editor of this story: Benjamin Ruffel at <a href='mailto:bruffel@assetinternational.com'>bruffel@assetinternational.com</a>