M&A

17 November, 2009

Canada's OMERS eyes growth, no mergers planned-BNN

* OMERS to grow organically to C$70-C$80 bln AUM

* No merger talks with other major Canadian funds

* Likes U.K. real estate, infrastructure

TORONTO, Nov 17 (Reuters) - OMERS Administration Corp plans to nearly double in size in coming years through organic growth, although the Canadian pension fund has no plans at present to merge with other large funds, Chief Executive Michael Nobrega told the Business News Network.

OMERS is one of Canada's top pension plans, with more than C$43 billion ($41 billion) in assets under management, but Nobrega has argued it needs to be bigger to be able to take advantage of global opportunities.

"I think anything under C$100 billion, you can't play," he told BNN television in an interview. "OMERS itself will grow organically over the next three to four years into the C$70 billion-C$80 billion range."

Nobrega said OMERS -- the Ontario Municipal Employees Retirement System -- has not held merger talks with the country's other major pension funds, but has been approached by mid-size funds with assets under management in the C$5 billion to C$13 billion range to invest together in global opportunities.

"Empirically, we have found that scale has worked to our advantage with respect to returns, and ultimately our objective is to provide investment returns for our pensioners down the line," he said.

He said mergers between OMERS and bigger players, such as the Ontario Teachers' Pension Plan Board, would be very difficult to make work, but were not be impossible.

INVESTMENT OPPORTUNITY

Nobrega pointed to the United Kingdom as an excellent market to invest in.

"We see that as a very attractive market both on the real estate side and the infrastructure side," he said.

He listed Canada, the United States, some parts of Western Europe and Australia as markets the fund manager views as attractive for infrastructure dollars.

In the past four or five years, OMERS has bid for some 12 or 14 international assets, winning only about three of those, Nobrega said, adding he was comfortable with those numbers.

"We don't expect to win more than 35 percent of the deals we bid for, because if you do that you are actually paying retail, you're paying much too much."

Nobrega reiterated that OMERS plans to shift its asset mix from the current allocations of 40 percent private market, 60 percent public market, to an even 50/50 mix.

Private market investments include infrastructure, real estate and private equity, and public market investments include stocks, bonds and other fixed-income instruments.

OMERS manages retirement funds for municipal employees such as police, firefighters and transit workers in Ontario, Canada's most populous province.

($1=$1.05 Canadian) (Reporting by Pav Jordan; editing by Rob Wilson)

Source: http://www.reuters.com