Canadian Pensions and Others Compete for UK Rail Bid

A consortium that included Borealis, the infrastructure investment arm of Canada's Ontario Municipal Employees Retirement System (OMERS), and at least two other groups are gearing up to bid for Britain's only high-speed rail link -- High Speed 1, or HS1 Ltd.

(August 9, 2010) — Ahead of a mid-August deadline to ameliorate the UK government’s growing budget deficit, a handful of groups are preparing to bid for Britain’s only high-speed rail link, which is likely to cost between $2 billion (€1.5 billion) and $2.6 billion (€2 billion).

The competing consortiums, the Wall Street Journal reports, consist of 1) a group of largely Canadian pension funds including Borealis, the infrastructure investment arm of the Ontario Municipal Employees Retirement System (OMERS); 2) Eurotunnel PLC and two of its shareholders as well as Goldman Sachs Group Inc; and 3) the infrastructure arm of Morgan Stanley, 3i Group PLC’s infrastructure arm, and the Abu Dhabi Investment Authority (ADIA).

The interest from the consortium of Canadian pension funds illustrates a growing trend as Canada’s schemes become increasingly active in acquiring UK companies. In late July, Canada Pension Plan Investment Board (CPPIB) and Onex Corp., the nation’s largest buyout firm, agreed to buy Tomkins Plc for $4.5 billion. In late March, the Ontario Teachers Pension Plan (Teachers’), Canada’s largest pension plan, beat European buyout firm CVC Capital Partners to acquire UK’s national lottery operator, Camelot, in a $576 million deal. And last year, Borealis partnered with Manchester Airports Group to bid for the UK’s Gatwick airport.

According to the WSJ, the winning bidder for the he 68-mile High Speed 1, or HS1 Ltd., which cost about $9.5 billion (£6 billion) to build and opened in November 2007, will receive a 30-year concession to the line between London and the Channel Tunnel.

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To contact the <em>aiCIO</em> editor of this story: Paula Vasan at <a href='mailto:pvasan@assetinternational.com'>pvasan@assetinternational.com</a>; 646-308-2742

The nation's largest pension system did not take action when it first heard about officials in the lower-income city of Bell, California, earning inflated salaries.

(August 9, 2010) — According to a report obtained by the Los Angeles Times, California’s $204.4 billion state pension fund was aware of inflated pay to a Bell, Calif., city administrator and other top city officials but did not take action. Now, they are in the process of reviewing the pension benefits of system participants who earn more than $400,000 a year.

“We are taking immediate action to investigate whether salaries of top public officials are being reported correctly and in accordance with the laws and rules that govern our system,” said CalPERS Chief Executive Officer Anne Stausboll in a statement. “We are committed to increased transparency and will take all steps necessary to protect our members, employers and stakeholders.”

According to the LA Times, California’s attorney general says he is shocked that nobody at the fund alerted law enforcement, and even board members at CalPERS are at a loss for words as to why the scheme wasn’t proactive about handling out-of-control salaries. In 2006, during a routine audit, the state pension fund learned that Bell City Manager Robert Rizzo had received a nearly 50% salary increase the previous year. The pay hike put his salary at $442,000, when CalPERS is supposed to stop pay spikes that can unduly enlarge retiree pensions. Rizzo’s salary eventually ballooned to nearly $800,000.

In addition to the fund’s review of high public official salaries, CalPERS stated it is:

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Joining the California Attorney General to investigate the facts surrounding the salaries and other compensation of City of Bell officials;
Conducting a second CalPERS review of Bell;
Placing on hold the retirement accounts of the individuals under investigation in the City of Bell and committing not to approve any pensions until satisfied the pensions are appropriate under the law; and
Working with members of the Legislature and the League of California Cities on potential legislation to address issues of transparency in local governments.

“We followed all the existing pension rules related to Bell four years ago, but it is clear that we need to work toward strengthening our regulations and possibly state law,” stated Stausboll.

To contact the <em>aiCIO</em> editor of this story: Paula Vasan at <a href='mailto:pvasan@assetinternational.com'>pvasan@assetinternational.com</a>; 646-308-2742