Ontario Teachers’ Pension Plan, Canada’s third-largest retirement fund, plans to open a Hong Kong office next year as it diversifies its investments and bridges funding shortfalls.
Deborah Allan, the retirement fund’s Toronto-based director of communications and media relations, declined to give further details in an e-mailed response to a Bloomberg News inquiry, saying plans are not yet finalized. The retirement fund had C$117 billion ($117 billion) of assets at the end of last year.
Ontario Teachers’ is among North American retirement funds, including Canada Pension Plan Investment Board and the Church Pension Fund, to set up a presence in Asia as they try to tap the region’s economic growth. Developing Asian nations are projected to grow 7.2 percent in 2013, while China is forecast to expand 8.2 percent, compared with the 3.6 percent global growth forecast, according to the International Monetary Fund.
Ontario Teachers’ reported an investment return of 11 percent last year, according to its 2011 annual report. Estimated funding shortfall narrowed to C$9.6 billion, from C$17.2 billion a year earlier, the report showed.
Ontario Teachers’, which invests and administers retirement savings of 300,000 active and retired teachers in Canada’s most-populous province, has offices in London and New York outside of Toronto, according to the annual report.
Canada Pension Plan Investment Board, the nation’s second-largest retirement fund, in February hired Mark Machin, former vice-chairman for Asia-Pacific region excluding Japan of Goldman Sachs Group Inc., to head its Asian unit. It opened its Asian office in Hong Kong in 2008. Church Pension Fund, which oversees $9.5 billion of assets for clergy of the Episcopal Church, has had a Hong Kong office since 2009.
Ontario Teachers’ saw Asia as a major area of growth and an action plan to expand in the region was still at the proposal stage, the Independent on Sunday reported in June, citing an unidentified industry person.
The retirement fund invested 79 percent of its C$51.7 billion public and private equities holdings outside of Canada last year, according to its annual report. Its non-Canadian equities returned 0.2 percent over the last four years, beating the 2.3 percent decline of its Canadian equity holdings.
In June, it bought Korea Asset Management Corp.’s 9.9 percent stake in Kyobo Life Insurance Co. for about 470 billion won ($430 million).
Ontario Teachers’ is seeking private investment opportunities in India, Jane Rowe, its head of private equity, said in July. It made its first foray into the country by investing in Mumbai-based buyout company Kedaara Capital Advisors LLP, she added.