Ontario Teachers’ Pension Plan Makes Deal to Increase Airport Holdings

The Ontario Teachers’ Pension Plan has made an agreement with Australian Airport owner MAp Airports in which the two parties will swap holdings in three different international airports.

(July 20, 2011) – The Ontario Teachers’ Pension Plan (OTPP) has made an agreement with Australia’s MAp Airports (MAp) to trade its holding in Sydney Airport and cash in exchange for MAp’s holdings in the Brussels and Copenhagen Airports, OTPP said in a news release.

In the deal, OTPP will give MAp its 11% holding in Sydney Airport as well as an undisclosed cash payment in exchange for MAp’s 39% holding in the Brussels Airport and its 30% stake in Copenhagen Airport. The deal will expand airport holdings for OTPP, who are also investors in the Birmingham and Bristol Airports in the UK.

The deal pairs OTPP, the largest single-profession pension fund in Canada with assets of $107.7 billion, with Australia’s MAp Airports Limited, which is one of the world’s largest airport owners and operators. According to MAp’s website, it owned a majority of the Sydney, Brussels, and Copenhagen airports prior to the deal. MAp, which describes itself as “a long-term investor with a uniquely integrated active management model, bringing together both financial and operational expertise,” has a market capitalization of $5.9 billion on the Australian Securities Exchange and lists many large pension funds as investors.

This deal marks a continued interest in infrastructure investments among pension funds and other institutional investors. Yesterday, aiCIOreported that six infrastructure funds closed during the second quarter of 2010 and that a positive trend was expected to continue in the infrastructure market. Airports are attractive targets for investors because they contain little risk and have a long economic life.

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The OTPP has become somewhat of a flag bearer for institutional investors entering into the infrastructure market. In aiCIO Magazine’s summer issue, a column on infrastructure by Dr. Angelo Calvello highlights the OTPP, which summarizes its interest in infrastructure: “Our global portfolios are focused on infrastructure and timberland assets that have a long economic life and offer low-risk, reliable returns linked to inflation in order to help pay pensions for decades.”

In yesterday’s news release, OTPP echoed a similar sentiment about its new acquisitions. “We believe that Brussels and Copenhagen Airports are excellent opportunities that strongly reflect our investment criteria and our long-term investment horizon,” said Stephen Dowd, Senior Vice-President of the Teachers’ Infrastructure Group.

It is not just pension funds that have found infrastructure to be an attractive investment opportunity; infrastructure projects have recognized that pension funds can offer important funding for them as well. In late June, the New York Times reported that the American Federation of Labor-Congress of Industrial Organizations intended to work with union pension fund managers to make $10 billion available to finance infrastructure projects in an effort to increase construction jobs for union members.

By Justin Mundt



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

Hedge Fund Assets Surge Past $2 Trillion

As investors continue to allocate new capital to hedge funds despite volatile markets, new data from Hedge Fund Research -- which tracks asset flows and performance figures -- has shown that global hedge-fund assets rose to a record $2.04 trillion by the end of the second quarter.

(July 20, 2011) — Hedge fund net assets have reached a record level of $2.04 trillion, according to data from Hedge Fund Research (HFR).

Meanwhile, the firm found that investors put $30 billion in new money into hedge funds during the second quarter, down slightly from the $32 billion they added in the first quarter. The firm also noted that inflows in the first half of 2011 were in excess of $62 billion.

“Strong second-quarter inflows offset a modest performance-based asset decline,” according to a news release accompanying HFR’s second-quarter performance and flows report. “Financial markets continue to be dominated by uncertainty and volatility and investors are allocating to hedge funds, expecting…this uncertain environment to persist,” Kenneth J. Heinz, president of HFR, said in the news release.

He added that the European sovereign debt crisis, the debate surrounding the US debt ceiling, accelerating Asian inflation, fallout from bank stress tests, and mixed US employment and housing statistics suggest risk is changing faster and more dynamically than ever before.

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Furthermore, large funds achieved the strongest results in the second quarter of 2011. Funds with assets over $5 billion attracted about two-thirds of the new inflows and now manage about 62.4% of all industry capital.

The good news for hedge funds follows research from Preqin, which discovered that institutional investors are considering hedge fund investments that could be worth a combined $195 billion over the next 12 months.

“With nearly a third of the investors on the Preqin database having fixed plans for new investments in the next 12 months, and many others investing opportunistically or considering new allocations, the future is looking bright for the industry,” stated Katherine Johnson, the report’s author. “Investors could invest up to $195 billion in the next 12 months, with up to 2,000 funds currently being sought. Funds of hedge funds, pension funds, insurance companies and a large number of other investor groups are looking to increase their hedge fund portfolios in the next year. These investors are seeking a wide range of strategies and structures and therefore it is vital that managers have the best intelligence on these investors if they are to gain a slice of this capital.”



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

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