OPTrust opens Sydney office for infra, PE

The $13.7bn Canadian pension hopes to invest $600m into developed Asian infrastructure over the next few years.

The Ontario Public Service Employees Union Pension Trust (OPTrust) has opened its first Asia Pacific office in Sydney, in order to focus on regional investments in infrastructure and private equity and meet its overall allocation goals, according to the firm.

OPTrust has transferred three professionals to the Sydney office, who will all jointly focus on the $13.7 billion pension’s investments in infrastructure and private equity. OPTrust hopes to invest $600 million of equity in infrastructure over the next two to three years, and the same amount in private equity over the same time frame.

Opening the new office emerged from the “evolution” of OPTrust’s investment programme, according to Stan Kolenc, managing director in Sydney responsible for infrastructure investments. With 45 percent of its portfolio dedicated to alternatives, the long-term goal is to have 80 percent of OPTrust’s assets in North America and Europe, and 20 percent in Asia.

OPTrust opened an office in London in 2009, and since then has become “more mature in its European investments,” Kolenc told Infrastructure Investor. Thus, OPTrust decided to make Asia its next focus.

“We like to be on the ground for the execution of deals and management of assets,” Kolenc said.

In infrastructure, OPTrust will be focusing solely on developed Asia, mostly Australia and New Zealand, he added. While other developed markets like Japan and Korea are in the mandate if the right opportunities surface, Kolenc said there are already many “healthy opportunities” down under.

OPTrust is more of a direct investor in infrastructure, so will not be looking at funds. However, it prefers to do its deals in partnership with developers or other investors, and Kolenc expects that the investor’s average cheque size will be around $200 million.

“We’re not obsessed with controlling the asset, but we just want a position of significant influence,” Kolenc said. The infrastructure investments OPTrust will look at include transportation assets, regulated utilities and contracted assets such as mining and renewables. OPTrust targets both operating assets and greenfield developments, though Kolenc said most greenfield investments will probably be in the renewables sector.

Before opening the Sydney office, OPTrust had invested $100 million in Asian infrastructure, including some port developments in Queensland, and just under $200 million in Asian private equity. The fund’s assets are in various stages of development, and it has already built a pipeline in the region.

In private equity, OPTrust focuses mostly on building long-term relationships with its “core GPs”, and its investments in that asset class tend to follow what those GPs focus on. OPTrust also places strong emphasis on co-investments with these GPs, Kolenc added. Now that the Sydney office is established, OPTrust is hoping to find and develop relationships with several more GPs, especially in emerging Asia.