OMERS Infrastructure to Explore Sustainability Investment Opportunities

The Ontario Municipal Employees Retirement System Infrastructure group has announced a joint investment opportunity with Spring Lane Capital to explore investments in growing businesses in North America that address sustainability in food, water, energy, transportation and waste.

OMERS Infrastructure’s joint investment venture follows its commitment to a 20% reduction in carbon intensity by 2025. The current OMERS Infrastructure portfolio extends to 31 companies across multiple continents, with portfolio companies based in the U.K., Europe, Asia and North America. OMERS Infrastructure currently has approximately C$32 billion ($23.88 billion) in assets under management, with investments spanning multiple sectors, including energy, digital services, transportation and government-regulated services.

“I’m delighted to announce our new partnership,” Gisele Everett, senior managing director and head of Americas, OMERS Infrastructure, said in a statement. “We both agree on the importance of investing in platforms focused on sustainability. While SLC brings a wealth of expertise in identifying, investing in, and successfully scaling growth infrastructure companies of the future, OMERS Infrastructure brings a strong track record of partnering with, supporting, and creating value in businesses across a broad range of infrastructure sectors.”

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Founded in 2017, Silver Lane Capital is a private equity firm based in Boston that focuses on providing capital for sustainable solutions in the energy, food, water, waste and transportation sectors. Christian Zabbal, managing partner of Spring Lane Capital, said in a statement, “SLC and OMERS Infrastructure will together seek to invest in companies with technologies and projects that require a partner that can provide not only substantial capital to accelerate growth, but also knowledge and expertise to help effectively and successfully scale the business. The unique businesses in which we invest tend to be underserved by traditional financial markets. In partnership with OMERS Infrastructure, SLC will now be able to offer a broader set of capital solutions, and we look forward to working alongside a like-minded partner with a long history of successfully investing in, and building, leading infrastructure businesses globally.”

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Tags: Gisele Everett, OMERS Infrastructure, Ontario Municipal Employees Retirement System Infrastructure, Spring Lane Capital, Sustainable Investments

The Federal Reserve has stayed as hawkish as Wall Street expected, with its third straight 0.75 percentage point hike in the benchmark federal funds rate Wednesday. But what’s really significant is the Fed policymaking committee’s take on the future: It thinks the rate will top out at 4.6% next year, which implies a further increase of 1.5 points or so.

At that stage, Fed Chair Jerome Powell remarked at his news conference Wednesday afternoon, “we will get a positive number” of one point or so above inflation. Right now, the benchmark is below inflation. The new band for the fed funds rate is 3.0% to 3.25%.

The Personal Consumption Expenditures Index, the Fed’s preferred inflation metric, now stands at 6.3% (the more widely known Consumer Price Index is at 8.2%). The Fed forecasts that the PCE will slip to 5.4% by year-end and to 2.6% in 2023. In other words, the central bank believes its medicine will have worked, or almost—its goal is a PCE of 2%.

Interest rates are obviously taking the Fed’s cue. The one-year Treasury yield just topped 4.0%, up from 0.6% in early August.

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The pace of the Fed’s increases going forward is anyone’s guess. Jeffrey Roach, chief economist for LPL Financial, wrote in a research note after the Fed’s announcement that the next boost likely will be 0.5 point, a slight deceleration from the 0.75 surge.

His reasoning: The Fed hikes are starting to slow the economy. “We are already seeing August rents decline all across the U.S. and imported food prices decline … so the upcoming inflation reports could be surprisingly better than expected,” he wrote.

How long will rates stay elevated? Charlie Ripley, senior investment strategist at Allianz Investment Management, wrote in a note that “the Fed believes they need to be more aggressive with regards to policy by bringing rates even higher and holding them there for a longer period of time.”

We’re talking the next two years. The Fed’s projection is that it will begin reducing the rate in 2024 to 3.9% and in 2025 to 2.9%.

Notably, the Fed doesn’t anticipate a really painful unemployment situation developing, with joblessness projected to rise to 4.4% in 2023 and 2024. The jobless number now is 2.7%. During the last period of aggressive Fed action to combat inflation, unemployment was much worse—the rate soared to 10.8% in mid-1981.