SpaceX, Gold Drive Gains at Ontario Teachers’ Despite Private Equity Losses

b8oa}xo34m7{v09lq9cx)r(o_media_dl_1.png Ontario Teachers' Pension Plan

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(Bloomberg) — Ontario Teachers’ Pension Plan earned 6.7% last year as the rising value of stocks, gold and SpaceX helped to offset an unusually large loss in private equity. 

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The Canadian firm said it has decided to revamp its private equity strategy to focus on three sectors — financial services, technology and services — after that group suffered a 5.3% drop. 

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The change means the pension plan no longer has specific teams focusing on health care investments and sustainable energy transition within that unit, according to its website. 

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“Our private equity and real estate teams had a more challenging year given broad sector headwinds,” Chief Executive Officer Jo Taylor said in a statement. “We responded with disciplined year-end valuation adjustments to reflect current market conditions, which weighed on performance.” 

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The value of Ontario Teachers’ private equity holdings plunged by around C$10 billion ($7.4 billion) last year to C$50.8 billion. The fund cited valuation pressures and “industrywide challenges for private equity investments.”

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The pension plan will continue investing in private equity using external fund managers, according to its annual report. The Canadian pension created a new team that focuses on global funds within that unit, led by Jeff Markusson. Fund investments comprise 28% of private equity investments, with direct investments constituting most of the rest. 

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The private equity team has undergone other changes over the last year, including naming Dale Burgess the new head for the equities business and creating a department to focus on value creation. At least five senior managers have departed the unit over the past several months. 

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Venture Growth

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Teachers’ venture growth portfolio surged 30%, largely because of its stakes in Elon Musk’s Space Exploration Technologies Corp., which has become one of the world’s most valuable companies, and software company Databricks Inc.

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The fund’s overall return, which fell short of the benchmark by five percentage points, pushed the Canadian fund’s net assets to C$279.4 billion as of December. 

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Teachers’ real estate group, which is long on Canadian shopping malls, had another tough year, losing 3.1% — partly because of the bankruptcy of department store chain Hudson’s Bay Co.

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The fund posted a C$1.2 billion loss from foreign currency exposure, mostly due to the US dollar’s slump. The pension plan reduced its exposure to the dollar and Treasuries early last year, Taylor said in a previous interview.

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(Adds details on private equity changes starting in the third paragraph.)

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