Ontario Teachers’ Closes Acorn Acquisition

(January 19, 2010) — The $88 billion Canadian Ontario Teachers’ Pension Plan, which invests and administers the pensions of 284,000 active and retired teachers in Ontario, has completed an acquisition of Acorn Care and Education, one of its fund managers’ portfolio companies.

Ontario Teachers’ acquired Acorn from Phoenix Equity Partners, a London-based private equity group. Ontario’s private equity arm is an investor based in Phoenix. The acquisition raises a red flag, signifying possible conflicts of interest by private equity investors. The Acorn acquisition provides one of the first examples where a formerly big limited partner has purchased a portfolio company from a fund it has invested in, reported the Financial News.

Ontario Teachers’ agreed to pay about $241 million for Acorn, a fast-growing British education company that provides facilities for children with special needs, according to a recent report from Private Equity News. The offer surpassed offers from up to 20 other interested parties, including HgCapital.

The deal will generate big pay-outs for several of Acorn’s top managers, including chairman and founder Kevin McNeany and Steve Page, its chief executive, the Financial Times reported.