Two of the largest Canadian funds have joined forces to invest in a London-based environmental consulting firm.
The Ontario Municipal Employees Retirement System’s (OMERS) private equity arm and the Alberta Investment Management Corporation (AIMCo) acquired Environmental Resources Management (ERM) for $1.7 billion from private equity firm Charterhouse Capital.
“We consider our investment in ERM to be further evidence of the private equity group’s ability to execute on its strategy of direct investing.” —AIMCo“There is no better endorsement of the OMERS model which provides the environment for management teams to thrive, while building great businesses,” said Mark Redman, senior managing director of OMERS’ private equity division.
The C$72 billion ($58 billion) pension fund said the club deal would bring OMERS’ capital deployed in Europe to more than C$2 billion.
AIMCo’s Head of Private Equity Peter Teti also said the co-investment acts as “further evidence of the private equity group’s ability to execute on its strategy of direct investing.”
According to ERM, the Canadian funds would support the consultancy’s management to expand its business by further increasing market share through new services, strategic acquisitions, and moving into international markets.
The joint investment is the latest of Canadian funds’ increase in private direct investments. Last week, the Canada Pension Plan Investment Board (CPPIB) agreed to purchase GE Capital’s private equity-lender Antares Capital for $12 billion—the C$265 billion fund’s largest acquisition to date.
“When you put the two entities together, that’s the value for us,” Mark Jenkins, CPPIB’s global head of private investments, told Bloomberg. “The comparative advantage Antares has is that you have long-term relationships with the middle-market sponsors, and that’s important.”
The GE-CPPIB transaction is expected to close in the third quarter of this year, with Antares remaining as a standalone independent business following the handover.
Credit rating agency Moody’s last week declared that the deal was a negative move for CPPIB because it “further concentrates the pension plan’s portfolio in less-liquid alternative investments that are difficult to evaluate in terms of both price and risk.” CPPIB’s alternatives exposure is the third highest of the major Canadian investors, while OMERS’ is the highest, Moody’s said.
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