OMERS Takes 25% Stake in International Schools Partnership

The private equity investment division for the Ontario Municipal Employees’ Retirement System (OMERS) has bought a 25% stake in International Schools Partnership (ISP), a UK-based global network of K-12 private schools, as part of the pension fund’s private market expansion in Europe.

The acquisition from Swiss asset manager Partners Group will value the international school group at about $2.3 billion, OMERS Private Equity said Monday. Partners Group will still hold a majority stake in ISP.

ISP was part of a buy-and-build strategy for Partners Group when it first founded the school network in 2013. The private markets asset manager said it planned to capitalize on consolidation opportunities in the K-12 school market.

Now, the investors are planning to continue expanding ISP’s international network. Since 2014, under the leadership of its chief executive Steve Brown, ISP has added 50 schools across 15 countries. It’s the fifth largest school network for K-12 students overseas.

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For OMERS, ISP will be part of its expansion into private equity opportunities across Europe, according to OMERS Head of European Private Equity and Senior Managing Director Jonathan Mussellwhite.

“Over the last 15 years, OMERS Private Equity has successfully executed on a strategy of partnering with top management teams at industry-leading companies to support accelerated growth,” Mussellwhite said in a statement. “ISP is a great fit for this strategy.”

The capital raised from the acquisition will be used to continue expanding ISP, particularly into investments in learning and technology, as well as improvement into physical infrastructure of the schools, and further mergers and acquisitions.

OMERS has $12.3 billion (C$14.8 billion) allocated to private equity, about 14% of the $87 billion (C$105 billion) in total assets OMERS had under management as of December.

Among the UK and Europe-based assets in the OMERS Private Equity portfolio are workforce firm Alexander Mann Solutions, sustainability consultancy firm ERM, and behavioral health care provider Lifeways.

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Tags: Europe, OMERS, Ontario Municipal Employees’ Retirement System, Private Equity

A trio of congressional legislators is looking to end regulatory uncertainty and provide legal cover for employers and retirement plan sponsors that consider environmental, social, and governance (ESG) factors in their retirement plan investments.

The Financial Factors in Selecting Retirement Plan Investment Act, introduced by Sens. Tina Smith, D-Minnesota, and Patty Murray, D-Washington, and US Rep. Suzan DelBene, D-Washington, would amend the Employee Retirement Income Security Act (ERISA) to clarify that retirement plans are allowed to consider ESG factors in their investment decisions when they are expected to have an impact on investment outcomes.

The sponsors of the bill say that despite strong demand for sustainable investment options, relatively few workplace retirement plans take sustainable investing principles into account because of the legal uncertainty regarding ever-changing regulations.

Late last year, the Department of Labor (DOL) under then-President Donald Trump issued a final regulation related to ESG investing that requires plans to only use financial considerations in investments. That final rule took a softer stance than the initial proposal, which ESG advocates said would chill sustainable investing by corporate pensions.

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But after President Joe Biden took office, the DOL said it would not enforce the final ESG rule and that it would revisit those guidelines.

State Street Global Advisors, which supports the proposed legislation, said that while the bedrock principles of ERISA have remained constant over the years, the nuances and changes that come with each presidential administration have made including funds that incorporate ESG considerations “problematic and fraught with uncertainty” due to the risk of litigation.

“We believe that addressing material ESG issues is good business practice and essential to a company’s long-term financial performance,” State Street Global CIO Lori Heinel said in a letter of support to Smith. “Legislation, unlike regulatory guidance, will bring certainty and closure to the back and forth of the past few decades.”

The bill would also allow retirement plan fiduciaries to consider collateral ESG or similar factors as “tie-breakers” when competing investments can reasonably be expected to serve the plan’s economic interests equally well. The bill’s sponsors say the tie-breaker rule has been in existence in varying forms in DOL guidance or regulation for decades, until it was largely repealed last year by the Trump administration.

Additionally, the bill would formally repeal last year’s DOL rule on ESG investing and limit future regulatory actions that impose regulatory burdens in an effort to discourage ESG investing by ERISA plans.

“Sustainable investment options are good for retirees and good for our environment,” Smith said in a statement. “We’re putting forth this legislation because we know there’s a growing demand for sustainable investing, and because we believe Congress should act now to provide the legal certainty necessary to make sure workplace retirement plans are able to offer these options to workers across the country.”