CUPE Files Legal Challenge to OMERS' Punitive Treatment of Paramedics

Author of the article:

Business Wire

Publishing date:

Aug 11, 2021  •  

Article content

TORONTO — Today, the Canadian Union of Public Employees (CUPE) filed a legal challenge with the Financial Services Regulatory Authority of Ontario (FSRA) about OMERS’ treatment of paramedic members accessing earlier retirement options.

“Paramedics have been demanding that OMERS allow them fair access to earlier retirement options for over a decade,” said Fred Hahn, President of CUPE Ontario, about the Ontario Municipal Employees Retirement System. “Now OMERS is saying working paramedics can transition to earlier retirement options only at the risk of deep cuts to their pensions. This is completely unacceptable, and these front-line workers simply deserve better.”

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Paramedics are recognized in federal law as a Public Safety Occupation, a designation that according to the Canada Revenue Agency acknowledges their working conditions as situations “where the limitations associated with ageing are common and have the potential to significantly endanger the safety of the general public.” Paramedics are eligible for earlier retirement options under federal law if their pension plan allows it.

“Access to earlier retirement is a health and safety issue for paramedics on the front lines and for the people we serve in the community,” said Peter Joseph, an active paramedic and chair of CUPE’s Ambulance Committee of Ontario. “Our work as paramedics takes an enormous physical and mental toll, and OMERS is refusing to recognize that reality.”

“Ontario pension law dictates that the value of a worker’s accrued defined pension benefit can’t be reduced but we believe that OMERS is doing just that with its rules for paramedic members’ transition to earlier retirement options,” said Hahn. “It’s our hope that this challenge will reverse OMERS rules that shortchange paramedics and ensure they have access to what they’re entitled to: earlier retirement options and a decent retirement.”

CUPE has raised these concerns with OMERS for months and has attempted to work with the pension fund on a solution.

CUPE represents more than 5,000 paramedics across the province. CUPE Ontario is the largest sponsor of OMERS, representing 125,000 plan members.

Background information

• In OMERS, there are Normal Retirement Age 65 (NRA 65) members and Normal Retirement Age 60 (NRA 60) members. Normal Retirement Age (NRA) refers to the age you can receive an unreduced pension. There are different retirement rules for NRA 65 and NRA 60 members. NRA 65 members can retire with an unreduced pension at the earliest of age 65, or 30 years of service, or “90 factor”. The earliest retirement age for a NRA 65 member is age 55. NRA 60 members can retire with an unreduced pension at the earliest of age 60, or 30 years of service, or “85 factor”. The earliest retirement age for a NRA 60 member is age 50.
• OMERS prohibited unions representing paramedics from negotiating earlier retirement options with employers from 2005 to 2020. Meanwhile, police and firefighters in the plan already had earlier retirement options for many decades. OMERS finally extended this right to paramedic members starting January 1, 2021. However, OMERS’ rules for transitioning paramedic members from NRA 65 to NRA 60 put members at risk of a reduced pension value.
• FSRA is the independent pension regulator in Ontario whose mandate includes protecting pension benefits and administering pension law.
• The intention of the Public Safety Occupation designation is described by the Canada Revenue Agency in the CRA External Technical Interpretation 2002-0119025.

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View source version on businesswire.com: https://www.businesswire.com/news/home/20210811005877/en/

CUPE report calls for third-party review, alleges underperformance by pension fund manager OMERS

DAVID MILSTEADI

GLOBE AND MAIL 

NSTITUTIONAL INVESTMENT REPORTER
PUBLISHED MAY 19, 2021

The union for Ontario public sector employees has renewed calls for an outside review of the Ontario Municipal Employees Retirement System, saying the pension’s 2020 loss is part of a long-term pattern of underperformance.

In response, OMERS said Wednesday that an independent review “is not warranted.”

The Canadian Union of Public Employees (CUPE) Ontario said that 2020 was “not just one tough year” for OMERS, which posted a negative 2.7-per-cent return in 2020. The union, which initially spoke out when OMERS released that result in February, issued a report Wednesday that suggests OMERS has underperformed its own internal benchmarks, as well as other large Canadian pension plans, for the past decade or more.

CUPE says OMERS’s 10-year return of 6.7 per cent is lower than seven other major Canadian pensions, whose returns over the period ranged from 8.5 per cent to 11.2 per cent. It’s also lower than the 10-year internal benchmark of 7.3 per cent. OMERS does not disclose the 10-year benchmark figure in its annual reports, which makes it different from the other plans, CUPE says. CUPE said OMERS provided the figure to the union.

The long-term underperformance can also be seen in the 10 years ended in 2019, indicating the issue is not solely the result of OMERS’s performance during the pandemic, according to CUPE.

CUPE has raised questions of OMERS management before, including a lengthy critique of its expenses after it announced its 2018 results. Fred Hahn, President of CUPE Ontario, said the union has engaged with OMERS management and “we kept being told everything would be fine ... we weren’t satisfied with that.”

Mr. Hahn and other CUPE members who appeared at a Wednesday press conference questioned whether benefits would ultimately be endangered.

“We care about this plan – we want to fix whatever’s going on, to provide our members with certainty,” said Yolanda McClean of CUPE’s Toronto Education Worker/Local 4400.

In a statement, George Cooke, the chair of the board of directors of OMERS Administration Corp., said the board, which is nominated by the employer and employee sponsors of the plan, “continually and thoroughly reviews investment performance, independent of management, utilizing external experts where appropriate.”

“Following the 2020 results specifically, we undertook a thoughtful look at our investment strategy and past decisions with an open mind,” Mr. Cooke said in the statement. “We are confident in our strong new leadership team and have concluded that our current investment strategy is appropriate. An additional third-party independent review is not warranted.”

CUPE Ontario represents 125,000 of the pension’s 289,000 active members. Two CUPE researchers authored the report, which was reviewed by PBI Actuarial Consultants of Vancouver. “Overall, we believe the analysis is sufficient to conclude that OMERS investment performance in 2020 and longer term is significantly lower than other comparable plans,” wrote Bradley Hough of PBI.

In 2020, OMERS’s real estate investments posted an 11.4-per-cent loss, while the value of its private equity portfolio declined by 8.4 per cent. Its performance also suffered from being heavily invested in dividend-paying oil and gas and financial-services stocks and underweight in technology companies. The fund’s benchmark was a gain of 6.9 per cent, so it underperformed by 9.6 percentage points, the biggest margin of the past decade, according to CUPE.

Ontario’s Pension Fund Managers Are Propping up the Fossil Fuel and Real Estate Industries

The Ontario Municipal Employees’ Retirement System, like pension funds everywhere, engages in socially harmful speculation and investment. Pension funds should be paid for by contributions and taxes, not financialization.

BY TOM FRASER

JACOBIN
12.01.2021

The Ontario Municipal Employees’ Retirement System (OMERS) is one of Canada’s largest pension funds. Serving 289,000 municipal workers employed by cities across Ontario, OMERS has net assets of over $105 billion that are intended to support members in their retirement. This year, however, has seen OMERS swamped by numerous scandals.

It is currently in the crosshairs of its largest constituent union, the Ontario chapter of the Canadian Union of Public Employees (CUPE). In May 2021, CUPE Ontario, the public-sector union that represents almost half of the fund’s members, released a report indicting the pension fund for chronic underperformance on its investments. While other large funds managed to navigate 2020 without taking significant hits, OMERS’ asset value contracted by almost 3 percent. Given that OMERS pensions derive 70 percent of their funding from investment returns, this has raised serious concerns for plan members.

CUPE Ontario has been quick to point out that this was also not just a case of one bad year. OMERS has failed to meet its own benchmarks multiple times over the past decade and trailed behind other pension funds of comparable size. The problem is not simply one of flagging returns on investment. OMERS, like other Canadian pension funds, is deeply implicated in fossil fuel investments and the financialization of what should be social goods. The consequence of these investment decisions is that pension funds often inadvertently harm the people they exist to serve — working members dependent on public services and planning for a secure retirement.

You Work for Your Pension, Your Pension Does Not Work for You

CUPE Ontario has been calling for increased transparency and an independent review of OMERS’ investment choices. Thus far, the pension fund’s only response has been to release midyear returns in an effort to prove that they are becoming more reliable money managers.

OMERS also finds itself in conflict with CUPE Ontario over early retirement options for paramedics. As workers in a high-risk job, Ontario paramedics feel that they should have the option to retire five years early without a reduced pension — an option already available to police officers and firefighters.

OMERS’ reluctance to recognize this — and, therefore, its implicit insistence that paramedic benefits be reduced — has resulted in a court case between the pension plan and the union. The retirement fund is desperate to minimize its obligations to give its members a comfortable retirement.

All this comes just a year after the OMERS board voted to remove the indexing guarantee on pensions after 2022, meaning that any payouts of savings after that point would not necessarily be linked to cost-of-living increases. This move is almost certain to restrict benefits going forward. Between the paramedics and cost-of-living indexing, OMERS seems to be doing all it can to minimize benefits.

OMERS’ incapacity to maintain full-funding levels and its efforts to reduce its payment obligations stand in extremely uncomfortable tension with the social corrosiveness of its investment choices. An examination of its investments reveals a panoply of socially harmful acquisition and speculation.

Pension Fund Capitalism

While neoliberal governments have pursued privatization agendas through direct sales and public-private partnerships, OMERS has built up an astonishing infrastructure portfolio. The fund has a startling geographic reach. From port facilities in the United Kingdom to toll roads in India, from electrical grids in Australia to public elementary schools in Nova Scotia, OMERS’ tentacles stretch worldwide. For the pension fund, critical utilities, vital for the day-to-day functioning of society, are reduced solely to items on a balance sheet — assets to flesh out portfolios.

Nonrenewable energy infrastructure forms a significant portion of OMERS’ holdings. In 2018, it spent over $1.4 billion to buy a 50 percent stake in BridgeTex, a crude oil pipeline linking West Texas to the Gulf Coast. A year before that, it bought a 34 percent share in GNL Quintero, the largest natural gas terminal in Chile. The climate catastrophe means little to an infrastructure division that describes itself as being “singularly focused” on expanding its inventory.

OMERS’ vast real estate holdings are managed by its subsidiary corporation Oxford Properties. With assets north of $60 billion, Oxford is an active player in the luxury real estate market in cities as far apart as Toronto and Sydney. Ontario’s municipal workers are the owners of high-end retail strips and office complexes in London, Paris, Berlin, and elsewhere. OMERS has ensured that municipal workers are — often unwittingly — complicit in global gentrification.

Through Oxford, OMERS is the 50 percent owner of Hudson Yards, the multibillion dollar real estate megaproject on Manhattan’s far West Side. The largest private development in US history, Hudson Yards is an astonishing monument to real estate finance, and only one of multiple OMERS-owned properties peppering the New York City luxury real estate landscape. In mid-September, OMERS and its partners at the Canadian Pension Plan sold St John’s Terminal in SoHo to Google for over $2 billion. In the global game of hyperfinancialized real estate capitalism, pension funds have become critical players, and few have done so as voraciously as OMERS.

The retirement savings of hundreds of thousands of Ontario workers depend upon ecological devastation, privatized critical infrastructure, and luxury real estate. As the necessities of everyday life have become a fertile soil for profit, pension funds have excitedly started grubbing about in these burgeoning gardens of lucre.

“Fiduciary Duty” Was Devised by Gordon Gekko

The financialized pension system is based on the Faustian bargain that potential yields to plan beneficiaries justify the wider social consequences of fund manager’s investment decisions. The gospel of “fiduciary duty,” enshrined in legislation and held aloft by financial managers, supposedly guarantees that the needs of retirees are put front and center by pension investors. So then, why is it that OMERS is yielding terrible returns, cutting benefits, and attempting to limit plan eligibility?

In its current form, the pension system does not work for its members — it works for the financial sector. Before all else, retirement savings are investment capital. Their function as old-age support is unimportant compared to their role as an engine of the global financial system. The less a fund is obligated to pay out as benefits, the more it can funnel back its resources into capital markets. Pension funds are growing to obscene sizes — Canada’s public plans have total assets of over $1.5 trillion — while retirement remains out of reach for most.

The Faustian bargain, then, seems to be predicated on a lie. Many workers do not enjoy the benefits of their pension fund’s enormous portfolios, and OMERS sidelines members while also doing significant social damage. A recent Canadian Centre for Policy Alternatives report shows that the Canadian Pension Plan Investment Board, one of the country’s largest pension funds, has flagrantly ignored demands for divestment. The Canadian Pension Plan, according to the report, has billions invested in the fossil fuel industry. And yet the fund’s benefits remain woefully insufficient for retirees hoping to live off of them. Such investments would be basically impossible to justify, even if their end result was a decent retirement for members — and they can’t even offer that.

In the hopes of protecting the retirement savings of their members, CUPE Ontario has launched a campaign calling for greater accountability and transparency at OMERS. But to “fix OMERS” — in the parlance of the campaign — would require a significant transformation of the Canadian pension system. The 2008 economic crash demonstrated the structural precariousness of financialized retirement, and nothing has been done since to fix the problem. So long as retirement is embedded in finance, both retirees and the greater public will have to deal with the consequences. The former through insufficient benefits, the latter through bearing the brunt of investment choices.

What, then, is to be done? First, the public pension system needs to be fully funded through a combination of contributions and taxation. Second, members should have democratic control over work-based pensions such as OMERS, and they should be primarily funded through increased employer contributions. Third, and most importantly, unions fighting to fix the pension system must fight for universal public housing, pharmacare, dental care, and long-term care provision.

As things stand, pension funds actively contribute to the commodification of necessities through their investments in things like real estate. A large pension — one which therefore relies upon massive investment returns — is only necessary so long as the cost of a comfortable retirement remains expensive. In order to definancialize pensions, we must also decommodify the necessities of everyday life.

ABOUT THE AUTHOR
Tom Fraser is a writer based in Toronto. He researches public sector pensions at Concordia University as an affiliate of the project Deindustrialization and the Politics of Our Time.

 

OMERS posts 8.8% return as it faces down members’ complaints

Paula Sambo, Bloomberg News

Samples of various employee benefits brochures are shown in a photo illustration, in Toronto on Tuesday, July 17, 2018. THE CANADIAN PRESS/Giordano Ciampini

Ontario Municipal Employees Retirement System, one of Canada’s largest pension funds, reported mid-year results for the first time in an effort to reassure members who are growing increasingly frustrated with its performance.

The pension fund, known as OMERS, gained 8.8 per cent on its investments in the six months through June, pushing assets to $114 billion. That follows a 2.7 per cent loss last year -- its worst since the 2008 global financial crisis -- when the pension fund suffered big pull-backs in its private equity and real estate holdings.

“Our results during the first six months of 2021 were driven by strong returns across our asset classes and by the commitment of our global teams,” Chief Executive Officer Blake Hutcheson said in a report posted to OMERS’ website Friday. “Our diverse portfolio is actively participating in the global economic recovery and our investment strategy remains focused on enhancing value over the long-term.”

In the year ended in June, OMERS returned 18.2 per cent, he said. Last year the pension fund fell far short of its 6.9 per cent return benchmark.
 

‘DESPARATE MOVE’

The union representing more than 40 per cent of OMERS’ members did not appear placated, instead renewing calls for an independent review of OMERS, saying the mid-year results aren’t enough to draw attention away from the pension fund’s “systemic underperformance.“

“Just like a single cold day doesn’t mean temperatures aren’t rising, half a year of investment returns tells us very little about the long-term performance of our pension plan,” Fred Hahn, president of the Canadian Union of Public Employees, said in a statement. “Clearly, this is a desperate move to mislead and distract in response to growing concerns about how OMERS operates.”

The union issued a report in May saying OMERS has underperformed its benchmarks, as well as seven other large Canadian pension plans, for at least the past decade.

“We heard from our broad member base who have asked for an update on investment results outside of our annual reporting process,” OMERS spokesman Neil Hrab said by email. “We value transparency and chose to provide this additional mid-year investment update.”

The Police Association of Ontario, another member of OMERS, said it was encouraged by the mid-year release and that the responsibility of the pension fund’s performance lies with its independent board.

“We are confident that this independent board – whose members are nominated by the plan’s primary sponsors, including the PAO – is the proper governance model for OMERS, and is appropriately positioned to determine what, if any, adjustments need to be made to investment personnel and strategies,” PAO’s president Mark Baxter said in a message. “We would encourage OMERS to continue its efforts to share information and build relationships with all plan sponsors, stakeholders and members.”
 

PRIVATE EQUITY SURGE

OMERS’ private equity segment jumped 15.8 per cent in the first half of this year, helped by a recovery in its buyout portfolio, gains in its ventures and growth equity strategies and by the sale of sustainability consultancy ERM Group Inc. to KKR & Co. in May. OMERS sold a majority stake in ERM, with the Alberta Investment Management Corp., to KKR for an undisclosed amount. The deal values ERM at about US$2.7 billion, including debt, people familiar with the matter told Bloomberg at the time.

Last year, OMERS’ private equity portfolio had a negative return of 8.4 per cent. A movie theater chain and a recruiting company in Europe constituted about 90 per cent of the drop, Hutcheson said in February.

Public equities advanced 12.8 per cent in the year through June, earning more than $4 billion for the pension fund, while its real estate bounced back to gain 8.8 per cent, driven by its Oxford Properties’ industrial logistics and residential assets as well as returns in some office sectors, the pension fund said.

 Caisse, OMERS hit hard after renewables company Azure Power’s share price plummets

written by Admin September 6, 2022 

Journalists and stakeholders at Azure Solar Power Plant, New Delhi, March 2018.Money Sharma/Getty Images

The stock market crash of India’s renewable power companies has slashed hundreds of millions of dollars from the portfolios of two major Canadian pension funds.

Caisse de dépôt et placement du Québec and Ontario Municipal Employees Retirement System (OMERS) own 75% of New Delhi-based Azure Power Global Ltd. AzuleneThe company lost two-thirds of the value of its shares listed on the New York Stock Exchange last week, most of which fell on Aug. 29.

On that day, the company announced that CEO Harsh Shah had stepped down after less than two months in office. In addition, since May 2022, we have identified the existence of whistleblower complaints alleging “potential procedural misconduct and misconduct by certain employees of factories belonging to one of our subsidiaries.” did.

After reviewing the whistleblower’s complaint, Azure said it found “deviations from safety and quality standards” and “evidence of manipulation of project data and information by certain employees.” The company said it is taking corrective action and has communicated its findings to the “appropriate authorities.”

The company said on August 1 that it had not completed an assessment of its internal controls over financial reporting and said it would delay filing its annual report. (A company that cannot assess its internal controls cannot prove that its financial statements are accurate.)

On Wednesday’s conference call with investors, board chairman Alan Rosling could not comment on the magnitude of the financial impact of the project data issue, noting that Azure may have to rectify its financial situation. Said it can’t even be ruled out. Asked by analysts if the CEO’s resignation was related to the whistleblower’s report, Rosling said Shah “came to me with a very personal request.” Confidentiality contract with. ”

Over the past six years, Caisse has spent approximately US$488 million to purchase over 34 million shares of Azure Power at an average price of approximately US$14, according to trading records. He closed at $3.55 for shares on Friday and $121.6 million for Caisse shares, an unrealized loss of more than $350 million.

OMERS has purchased approximately 14 million shares of Azure Power stock for a total of US$289.2 million, spending an average of just over US$21 per share since August 2021. The stock was worth US$48.8 million as of Friday, leaving him with a loss of more than US$200 million in just over a year.

Canadian pension funds have invested in giants, with portfolios in the hundreds of billions of dollars and dozens of large investments. Many are home runs rather than strikeouts, as the fund has reported returns above its benchmarks for many years.

Similarly, Caisse and OMERS lock in losses only when you sell shares. If held and Azure Power restored, the two would be able to get their stock back and minimize the pain. Rupesh Agarwal, Azure’s acting CEO, said Wednesday:

But the timing and perspective of the controversy are poor for both Caisse and OMERS.

When Caisse reported half-year results for August featuring a loss of $33.6 billion, huge amount of time addressing US$150 million wipeout of Celsius Network, a major cryptocurrency investment filed For bankruptcy protection in July.

Caisse CEO Charles Emond said in response to a myriad of questions from the media: “Otherwise, all investments will pay off.”

OMERS, on the other hand, has reported industry-leading revenue over the last 18 months. Reversing the story from 2020 when Canada was the only major pension fund lose moneyBut OMERS lost all of its investment in Vue International Bidco PLC, Europe’s largest cinema chain, in July. When a debt restructuring wiped out capitalOMERS jointly owned the chain with Alberta Investment Management Co. (AIMCo).

Caisse spokesperson Kate Monfette said in an email that the fund manager “has strong long-term beliefs in the renewable energy sector, which plays an important role in addressing climate change. We expect to maintain the highest governance and compliance standards and to address any issues that may arise in such matters promptly and effectively.”

OMERS spokesperson Neil Hrab said in an email that pension managers are “investors in quality investments around the world. We are committed to acting with integrity and upholding the highest professional standards. We invest in companies that share our values, including: Consistent with this, we expect the companies in our portfolio to adhere to strong and effective governance and compliance practices, and to avoid related issues. We fully support the necessary and appropriate measures against

Indeed, Azure Power appears to be an ideal investment in multiple themes that are popular with institutional investors, combining the renewable power industry with India’s home to one of the world’s largest economies. rice field.

Founded in 2008, Azure Power says it installed India’s first utility-scale private solar power project in 2009. It issued India’s first ‘green bond’ and claims to own and operate the largest single-site solar power project in India.

It also said it was the first power company outside India to list on the New York Stock Exchange. This makes them subject to US securities laws and regulations, which is typically attractive to major institutional investors.

Caisse joined Azure Power from the beginning as a public company by purchasing US$75 million in shares at $18 per share in its October 2016 initial public offering. I bought more shares on the open market and even participated in several company public offerings.

OMERS was first acquired in August 2021 with an investment of US$219 million.

However, both funds may have made their most serious commitment to Azure Power earlier this year. The company has launched an equity sale called a rights offering. Caisse and OMERS have signed a “backstop agreement” to purchase unsubscribed Azure Power shares in the offering.

When Azure Power announced in January that it had only sold 78.4% of its rights, Caisse and OMERS, which had already bought nearly 11 million shares in the offering for US$15.79 each, stepped in to step in to add another $340. I bought 10,000 shares.

Overall, Caisse spent just under $158 million and OMERS spent just under $70 million, including backstop shares.

As part of their ownership of Azure Power, the two funds placed their employees on the Azure board.

Cyril Cabanes, Managing Director of Caisse’s Asia Pacific Infrastructure Investment business based in Singapore, has been a member of Azure’s Board of Directors since January 2017. November 2019.

Delphine Voeltzel, managing director of OMERS Infrastructure in Asia, joined the board in May.

“As a board of directors, we are deeply concerned, outraged, upset and deeply involved in this issue,” Rosling, chairman of Azure, said on an investor conference call. “It is clear that as a company we need to take a very hard look at ourselves and ask questions like the ones you are asking … to be able to answer quickly and confidently about our management. is needed.”

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OMERS PENSION IS THE SHAREHOLDER

Thames Water secures £750 million cash injection from shareholders
By Peter Davison
10 July 2023

Thames Water workers using high pressure water jets to clear a blockage

Thames Water has secured £750 million from its shareholders as it fights to fight off nationalisation.

The news came in an announcement to the London Stock Exchange today (Monday). The company said it aims to raise a further £2.5 billion between 2025 and 2030.

Read more: Government prepares for possible collapse of Thames Water

Thames Water's future came under the spotlight in June when its chief executive Sarah Bentley unexpectedly stepped down after just two years in the role.

There was speculation that the Reading-headquartered utilities giant – which serves 15 million customers in Swindon & Wiltshire, Berkshire, Oxfordshire, Gloucestershire, and in London – could be taken into temporary nationalisation if it could not service its £14 billion debts.

In annual results published today, the firm reported an underlying pre-tax loss of £82.6m for the year to 31 March.

https://financialpost.com/fp-finance/omers-bci-risk-reputation-hit-from-thames-water-investments

OMERS, BCI risk reputation hit from Thames Water investments 

4 days ago ... The Ontario Municipal Employees Retirement System (OMERS) and British Columbia Investment Management Corporation (BCI) own 31.8 per cent and and ...

https://community.ionanalytics.com/omers-in-talks-with-lps-about-thames-water-rescue

OMERS in talks with LPs about Thames Water rescue 

3 days ago ... As well as owning a direct stake in Thames Water, the Canadian pension fund also manages stakes in the water company owned by several large ...

https://www.bbc.com/news/business-66079676

Big Thames Water investor backs turnaround plans - BBC News 

Jul 2, 2023 ... Thames Water is a private company, owned by a group of investors, with the largest being the Canadian pension fund, OMERS, with 31.8%.

https://www.omersinfrastructure.com/portfolios/thames-water

Thames Water - OMERS Infrastructure 

Thames Water is the largest provider of water and wastewater services in the U.K., serving approximately 10 million water customers and 15 million ...

Ontario Teachers' buys stake in U.S. renewable energy portfolio

TORONTO -- Ontario Teachers' Pension Plan Board says it has signed a deal with a subsidiary of NextEra Energy Inc. to buy a 50 per cent stake in a portfolio of 13 wind, solar and energy storage assets in the U.S. for US$849 million.

The pension fund manager has also committed to buy at least a 25 per cent interest in a US$824-million convertible equity portfolio financing announced by NextEra Energy in October.

NextEra Energy manages and owns contracted clean energy projects.

Chris Ireland, managing director, greenfield and renewables at Ontario Teachers', says the investment marks the beginning of what is expected to be a long-term partnership with the company.

The deal is expected to close later this year or in early 2022, subject to customary closing conditions and regulatory approvals.

The pension fund manager committed earlier this year to having net-zero greenhouse gas emissions across its portfolio by 2050.

Municipal employees pension fund commits to net-zero emissions by 2050

Author of the article: Brigid Goulem
Publishing date: Nov 29, 2021

The Ontario Municipal Employees’ Retirement System, the pension plan for  municipal employees, committed this week to achieving net-zero emissions by 2050.

The recent announcement by OMERS follows in the footsteps of net-zero commitments by other major pension funds across Canada, including Caisse de depot et placement du Quebec, the Ontario Teachers’ Pension Plan and the Investment Management Corporation of Ontario, and only six weeks after city council passed a motion calling on the pension fund to implement targets to eliminate fossil fuels and invest in renewable energy.

“We’ve seen some action from municipal councils, and the resolution that was passed by Kingston I think was very significant and increased the pressure on the plan to have a coherent response to the climate crisis. I can also say that internationally a large and growing number of major pension plans have been moving towards finally setting up a plan for alignment for their investments (with the 2050 goal from the Paris Accord),” Adam Scott, director of Shift: Action for Pension Wealth and Planet Health, said in an interview with the Whig-Standard.

While this week’s announcement does not commit to divesting from fossil fuels, Scott believes it is an important step for both the health of the planet and the sustainability of the fund’s investments.

“The commitment that was made, they do not have a plan in place to meet yet, I think that’s fair to say. But we can give them some credit. They’ve just announced this long-term target, (so) they’re obviously going to come back with more detail,” Scott explained.

The goal of achieving net-zero emissions by 2050 builds on an existing commitment by OMERS to reduce the carbon intensity of the total portfolio by 20 per cent by 2025, which Scott says will require divestment from fossil fuels.

“It’s going to be very difficult for a pension fund like OMERS to remain heavily invested in fossil fuels and hit any interim target that it’s going to set for itself. The largest highest carbon in its portfolio needs to be removed quickly,” Scott said.

While he believes that some higher carbon industries have room to decarbonize, there is no viable pathway to net-zero emissions for fossil fuel production and transportation.

“Lots of companies have credible and profitable pathways to decarbonize themselves over time, but fossil fuel companies by and large, do not … there’s no credible pathway for companies that extract, produce and transport fossil fuels directly for combustion. So that’s why we single out of fossil fuels as being particularly high risk,” he said.

While Scott is glad to see a commitment to reduce emissions, he expressed concern regarding the ambiguity of “net-zero” emissions.

“The net-zero is sort of an attempt at providing some flexibility globally,” he explained. “It’s interpreted very problematically in most of these (commitments), and I’m assuming net-zero could mean that they (think they) can somehow purchase offsets or something, which just isn’t true. For an investor like OMERS, the portfolio needs to really reach absolute zero emissions by 2050.”

Despite some concerns, Scott is glad to see OMERS following the lead of other major pension funds across Canada and committing to achieve net-zero emissions.

“OMERS manages the investments of municipal employees across Ontario, and municipalities are leading on climate action in many cases. Most municipalities now have strong climate plans and they’re implementing them, and they’re also on the front lines of the impacts, so it’s about time that the pension fund manager for those employees is also aligning the strategy with the same goals. So that’s really good to see,” he said.

NO MENTION OF THAMES WATER

Canada’s Omers pulls its venture capital arm from Europe

Mark Bergen and Paula Sambo, Bloomberg New

Omers Ventures, the venture capital arm of the Canadian pension plan, is pulling out of Europe, marking a prominent global departure from the continent as EU technology investing dwindles.

The venture unit had set up a US$332 million fund in 2019 to focus on European startups. A spokesperson for the Ontario Municipal Employees Retirement System confirmed the plans to exit the region, noting that its team had decided to focus on North America.

“Decisions to say goodbye to valued colleagues and friends are difficult, but we prioritize all our investment decisions to deliver on our pension promise, and doing what we believe to be in the best interest of our plan members,” the spokesperson wrote in an email.

The pension plan said its commitment to early-stage venture investing “remains strong” and it has invested $1.86 billion into young companies.

Launched in 2011, Omers Ventures has backed several notable Canadian tech companies, including Shopify Inc. and Hootsuite Inc. Bloomberg News reported in 2019 that the fund had invested €76 million into European companies. Omers had hired European investors from Balderton Capital and Uber Technologies Inc.

In 2019, European tech investing was soaring, thanks in part to an influx of funds from the U.S., Canada and Asia. It has since slowed dramatically. Venture financing into startups during the second quarter fell about 60 per cent in Europe to €12.3 billion from a year earlier, according to data from PitchBook. 

Six water companies to face legal action over alleged underreporting of pollution incidents


Members of the public and campaigners from Hastings and St Leonards Clean Water Action, protest against raw sewage release incidents on the beach in St Leonards, Sussex, August 26, 2022

SIX private water companies across England are facing landmark legal action over allegations of under-reporting pollution incidents and overcharging customers.

Severn Trent Water, Thames Water, United Utilities, Anglian Water, Yorkshire Water and Northumbrian Water could end up forking out more than £800 million in compensation to over 20 million customers if the cases are successful.

Environmental and water consultant Professor Carolyn Roberts, who is being represented by Leigh Day Solicitors, claimed that the firms have broken competition laws by misleading the Environment Agency and regulator Ofwat.

She alleges they have been under-reporting the number of sewage discharges, resulting in customers being “unfairly overcharged” for wastewater services, and that had sewage discharge reporting been accurate it would have lowered customer bills.

Prof Roberts said: “Like many others across the country, I have viewed with horror the escalating number of stories in the media regarding the volume of sewage discharged into our waterways and on to our beaches.

“The population has a right to expect that our rivers, lakes and seas will generally be clean, except under exceptional circumstances.

“It appears that because of the serial and serious under-reporting at the heart of these claims, water companies have avoided being penalised — I believe this has resulted in consumers being unfairly overcharged for sewage services.”

Anyone who has paid a water bill to one or more of these companies from April 2020 — or April 2017 for Severn Trent Water customers — may be entitled to compensation if the claims succeed.

Leigh Day, which said the move is the first environmental collective action case of its kind, is seeking money for customers on an opt-out basis, meaning people only have to come forward to claim compensation if the case is successful.

It is bringing Severn Trent Water to a competition appeal tribunal and will issue five further claims against the other water companies over the coming months.

Leigh Day partner Zoe Mernick-Levene hailed the “hugely significant” claims.

“Not only is compensation being sought for millions of customers who have and continue to pay higher water bills, but we hope that it will also send a message to water companies that they cannot unlawfully pollute waterways and mislead their regulators without consequence.”

THAMES WATER MAJOR INVESTOR IS OMERS

ONTARIO MUNICIPAL EMPLOYEES RETIREMENT SYSTEM

P3 PUBLIC PENSIONS FUND PRIVATE BUSINESS

Fairfax buys back $1-billion of shares after CPPIB, OMERS investment

DECEMBER 26, 2021

Fairfax Financial Holdings Limited bought back US$1 billion of its own stock at a premium price on Christmas Eve, after selling a stake in a subsidiary to institutional investors OMERS and the Canada Pension Plan Investment Board for US$900 million.

Fairfax, a global property and casualty (P&C) insurance company, in November announced plans to buy back up to 8.7 percent of its own stock for between US$425 and US$500 for each subordinated voting share. At the same time, Toronto-based Fairfax said it had acquired its Stamford, Conn.-based division Odyssey Group Holdings Inc. Sold a 9.9 percent stake in CPPIB and OMERS, Canada’s two largest pension fund managers.

Fairfax is the latest in a string of Canadian financial services companies to initiate significant share buybacks, as regulators ease capital restrictions imposed during the pandemic and allow banks and insurers to cash in as they see fit.
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Toronto-based Fairfax last Friday set the buyback price on its buybacks using a “modified Dutch auction,” which allows shareholders to choose the price they are willing to tender their stock at. According to a report by Scotiabank analyst Phil Hardy, the auction was “slightly oversubscribed”.

Fairfax received two million shares at the top end of its pre-set range at US$500 each. That day, Fairfax shares closed at US$464.02 on the New York Stock Exchange, so the buyback played out at an 8 percent premium to where the company’s stock was trading at the time.

The decision to sell a stake in a subsidiary and use the capital to buy back the shares “provided a great solution for increasing book value per share in the near term while supporting future growth,” Mr. Hardy said.

The CPPIB and OMERS investments valued Odyssey at 1.7 times its book value. In contrast, the buyback saw Fairfax repurchase its shares at a 10 percent discount to the company’s reported book value, which is US$561.88 per share. Mr Hardy said: “The Odyssey deal highlights a significant gap between Fairfax’s share price and the estimated intrinsic value of the company and its holdings.”

Fairfax, controlled by entrepreneur Prem Vatsa, also raised capital in October by selling a 14 percent interest in London-based reinsurance subsidiary Brit Ltd to OMERS for US$375 million.

Historically, Fairfax has used the cash generated from its operating companies and investments to grow through acquisitions, rather than paying for share buybacks. In recent years, the company expanded into India and Africa.

The property, casualty and reinsurance industries are consolidating around their biggest players, which includes Fairfax. “With the P&C business becoming more risky and complex, the capital requirements and the need for reinsurance will increase,” Swiss Re, the world’s largest reinsurance company, said in a recent report. The Zurich-based company said: “Asset will be the fastest-growing segment, with global premiums projected to grow 5.3 percent annually through 2040. Climate risk will be the main driver of asset growth.”

Fairfax is expected to continue snapping up smaller rivals. In a report last week, RBC Capital Markets analyst Mark Dwley said: “The company has more than $1 billion in holding company cash and has the operational flexibility to pursue a variety of near-term and long-term growth initiatives and acquisitions.” “

Omers Posts 0.4% Loss as Equity Markets Sap PE Gains

Layan Odeh
Thu, August 18, 2022 



(Bloomberg) -- The Ontario Municipal Employees Retirement System posted a 0.4% loss for the first six months of 2022 as a decline in public stocks exceeded the pension fund’s private equity gains.

“The geopolitical environment was incredibly, not only unpredictable, but tragic in so many ways,” Omers Chief Executive Officer Blake Hutcheson said in an interview Thursday. “We have inflation that’s today higher than it’s been in 40 years. Central banks are raising rates quicker than they have since any time since 1994.”

The fund’s public stock holdings dropped 13.2% and the bond portfolio slid 2.5%, it said in a statement, while private equity investments gained 7.7%.

Omers is a net-seller so far this year as the firm realized investments in private equity, infrastructure and real estate -- including selling its interests in GNL Quintero SA, a liquid natural gas terminal in Chile, and in Sony Center in Berlin. The Toronto-based pension plan has also agreed to sell its interest in the holding company that controls Michigan-based Midland Cogeneration Venture.

“Over the last year, we were actually expecting some downturns and making sure we were armed for the next wave of investment opportunities,” Hutcheson said.

Fear of a recession has weighed on deal-making and initial public offerings, crunching valuations and restricting the ability of private equity firms to exit investments. Omers has a strong war chest available to purchase high quality assets, according to Hutcheson. “We will be able to continue to buy in this cycle but very selectively -- very high quality assets, very much on target with strategy.”

The pension fund’s net assets decreased to C$119.5 billion ($92.3 billion).

Montreal-based Caisse de Depot et Placement du Quebec reported a 7.9% loss in the first six months of the year, while Canada Pension Plan Investment Board, the country’s largest pension fund, posted a negative 4.2% return in its fiscal first quarter. Ontario Teachers’ Pension Plan said this week it had a 1.2% net return in the first six months of the year.

WORKERS CAPITAL
Canada's OMERS ditches Exolum stake sale amid lacklustre oil interest - sources


Andres Gonzalez and Isla Binnie
Thu, December 1, 2022 

LONDON (Reuters) - Canadian pension fund OMERS has scrapped a plan to sell its 24.6% stake in Spanish fuel storage and transportation firm Exolum after bids from infrastructure and private equity investors failed to meet price expectations, two sources told Reuters.

OMERS, which has $121 billion in net assets, hired Citigroup earlier this year to sell the stake it bought 2016 for around 700 million euros ($734.23 million), the sources said.

A spokesperson for OMERS said the Canadian firm aborted the sale after conducting a strategic review of its investment in Exolum.

"We have concluded that we will stay invested to support the ongoing and planned energy transition of the business," the spokesperson said.

Two sources said bidders were wary because the company faces challenges as it needs to navigate an international push into low-carbon fuels.

Exolum, which started as a state-controlled oil service firm in 1927, is also backed by CVC, which owns a 24.84% stake, Australia's Macquarie with 19.87%, followed by Credit Agricole, Dutch pension fund APG and Canadian state insurance agency WSIB.

The company posted net profit of 213.8 million euros last year, on revenue almost entirely from storing and transporting oil and oil-related products through its network of pipelines.

It has said it is committed to developing alternative energy projects with technology including green hydrogen and biofuels.

Exolum manages 6,000 kilometres of oil pipelines and 10.5 million cubic metres of oil products storage capacity in Spain and Britain.

It has also invested in infrastructure projects in Ireland, Germany, the Netherlands, Panama, Ecuador and Oman.

(Reporting by Andres Gonzalez and Isla Binnie, editing by Cynthia Osterman)

P3 PUBLIC PENSIONS FUND PRIVATIZATION

Two Canadian pension plans risk reputation hit from investments in troubled Thames Water

U.K. utility fiasco plunges OMERS and BCI into the midst of potential rescue plan

Author of the article:Barbara Shecter
Published Jul 06, 2023 • Last updated 1 hour ago • 3 minute read

The U.K. government has expressed serious concern about the financial plight of the country's biggest privatized water company. 

PHOTO BY BEN STANSALL/AFP VIA GETTY IMAGES

A troubled water utility company in the United Kingdom that counts two of Canada’s biggest public pensions as large shareholders is facing regulatory scrutiny and fines for sewage leaks and could require a financial bailout

The Ontario Municipal Employees Retirement System (OMERS) and British Columbia Investment Management Corporation (BCI) own 31.8 per cent and and 8.7 per cent of Thames Water, respectively. Analysts at DBRS Morningstar said in a July 5 report that OMERS and BCI are expected to weather the storm with minimal financial damage given their size, diversification and long-term performance — even if Thames Water were to collapse — but there is reputational risk for the Canadian pensions, which could affect future investment opportunities.

Thames Water is the largest water utility in the U.K., serving about a quarter of the population. It is heavily indebted and has faced financial difficulties in the face of rising interest rates. Investors have been called on to pony up £1 billion, after injecting £500 million in March, to upgrade infrastructure and help manage the £14-billion debt load. However, the U.K. government is now understood to be considering a range of options to stave off the collapse of Thames Water, including the possibility of placing it into a special administration regime that could take the company into temporary public ownership and result in financial losses to the current shareholders, according to the DBRS report.

One of Thames Water’s large shareholders, the £90-billion Universities Superannuation Scheme, which has a 20 per cent stake in the utility, has publicly pledged support for Thames Water. It will face questions about its stake in Thames Water from the U.K.’s pension regulator, as early as this week, according to a July 5 report from the Financial Times, citing people familiar with the situation.

Both Canadian pensions declined to comment on their role in what is happening with Thames Water, referring instead to a June 28 statement from Thames Water Utilities Finance PLC, which said the utility “is continuing to work constructively with its shareholders in relation to the further equity funding expected to be required to support Thames Water’s turnaround and investment plans.”

That statement added that the utility’s regulator, Ofwat, is being kept “fully informed on progress of the company’s turnaround and engagement with shareholders” and that Thames Water maintained a strong liquidity position including £4.4 billion of cash and committed funding as at 31 March 2023.

OMERS has been an investor in Thames Water since 2017, following a divestiture by Australia’s Macquarie Group, which later faced criticism for ratcheting up the debt while taking profits from the utility. BCI has been an investor in Thames Water since 2006.

Keith Ambachtsheer, a Canadian pension expert and director emeritus of International Centre for Pension Management, said the Thames Water case pokes a hole in the frequent characterization of infrastructure investing as a suitable investment for long-term pension plans and an easy way to generate inflation-linked returns.

“Thames Water offers a counter to that view: infrastructure investing can also be challenging and risky,” Ambachtsheer said in an email to the Financial Post on July 5.

The growing scandal at the utility has raised questions in the U.K. about the strategy of privatizing critical utilities.

In one of the latest knocks for Thames Water, the embattled utility was fined £3.3 million on July 4 at Lewes Crown Court after a faulty storm pump that went unnoticed spilled sewage into rivers near Gatwick Airport.

On June 27, Sarah Bentley, the CEO of Thames Water, stepped down abruptly. Her exit came amid reports that the utility’s leakage rate was at a five-year high, according to a report in the Guardian. Before she stepped down, Bentley forfeited her bonuses but it appeared to be too little to dispel growing controversy.

The problems at Thames Water have also spilled into ESG funds, as the utility has issued around US$3 billion of green bonds since 2022.

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According to a Bloomberg News report on July 4, more than 200 ESG funds bought into those bond issues and are left assessing what impact any environmental, social and governance shortcomings at the utility will have on their holdings.

“Investing in water sounds ‘green’. Investing in a water utility with a long list of environmental problems and apparently no credible plan to resolve them is not,” said Ambachtsheer. “Where was the ‘due diligence’?”

The pensions invested in Thames Water may also face questions over the utility’s environmental impact.