24
infrastructure
investor
may
2014
Competition is the mother of invention.
Or, perhaps more accurately, of reinven-
tion. As the asset class has grown ever
more popular among large institutional
investors over the last few years, many
fund managers have sought to cope
with the relative scarcity of sizeable assets
by sharpening their investment focus,
tightening relationships with potential
sellers or looking at the smaller end of
the market.
But anOntarioMunicipal Employees
Retirement Scheme (OMERS) initiative
has a different take. Its Global Strategic
Investment Alliance (GSIA) has a delib-
erately wide investment remit, spanning
Western markets, and targeting sectors
including airports, railways, gas distri-
bution and power generation. It is an
unlisted co-investment platform teaming
up some of the world’s largest potential
buyers, with Borealis – OMERS’ infra-
structure investment arm – at its helm.
And it targets
very
large assets – so large
that, its members hope, they will be out
of reach for almost anybody else.
OMERS, a $65.1billionCanadianpen-
sion fund–whichdeclined tocomment for
this article – is not the only infrastructure
investor aimingbig.Over the last two years,
US fund managers Global Infrastructure
Partners and Brookfield Asset Manage-
ment both set standards for heft by clos-
ing vehicles of $8.25 billion and $7 billion
respectively. ButGSIA is inanother league
altogether. Launched in 2010, its stated
ambition is to raise $20 billion – which
would make it the largest infrastructure
investment platform by a wide margin.
GSIA, arguably, is not all about size.
The platform is led by OMERS Strategic
Investments (OSI), a unit the institu-
tion says is intended to “incubate invest-
ment platforms that do not fit under
the mandate of [its] existing invest-
ment entities” and “further differenti-
ate OMERS from conventional pension
funds”. This includes bringing investment
opportunities to OMERS’ other units –
which comprise private equity, real estate
and infrastructure arms – as well as forging
relationships with like-minded institutions.
In most respects GSIA responds to
this brief. Set up along with a consortium
of Japanese investors led by Mitsubishi
Corporation – the country’s largest trad-
ing house – the platform allows OMERS
to deepen relationships with cash-rich
investors so far largely removed from
alternative investment markets. By pro-
vidingOMERS with additional firepower
and potential contacts, it also has the
potential of bringing new deal opportu-
nities to its teams.
‘THE BIGGEST GORILLA IN THE
MARKET’
Notwithstanding deeper strategic con-
siderations, however, the main rationale
for establishing GSIA still seems to boil
down to size.
A fund manager with good knowl-
edge of the platform reckons OMERS
originally intended to partner with
three or four institutions each willing
to commit $5 billion which, added to $5
billion of equity “from the house”, would
have taken the total pot to $20 billion.
The ambition was to become the “biggest
gorilla in the market” – so as to pursue
deals out of reach for most rivals.
In a November 2013memo prepared
By gathering together global pension heavyweights,
OMERS’ Global Strategic Investment Alliance
aims to punch above its weight. In the first of a
new series looking at some of the world’s most
innovative investment platforms, market sources
tell
Matthieu Favas
why the Alliance risks falling
short of its ambition
The gorilla that
wants more bulk
g l o b a l
s t r a t e g i c
i n v e s t m e n t
a l l i a n c e
SPECIAL FEATURE
INFRASTRUCTURE
TRAILBLAZERS
