Patience pays for Canadian pension funds able to take advantage when governments run out of cash, says Alberta Investment Management chief

Audrey Dixon

LOS ANGELES , January 13, 2012 (Industry Intelligence) – One year on from striking a sweet multi-million dollar deal for embattled Great Southern Plantations in Australia, Alberta Investment Management Corp. (AimCo) appears to be sitting pretty with the resources and creativity to dive in where governments are failing, according to a Reuters article on Jan. 13.

Under the deal for Great Southern announced on Jan. 27, 2011, Edmonton-headquartered AimCo, in conjunction with Australia New Zealand Forest Fund, acquired Great Southern's timberlands for AU$415 million.

As reported at the time, in the deal--one of the largest forestry estate transactions Australia has seen--Sydney-based New Forests would be appointed to manage the estate comprising more than 2,500 sq. km. across six Australian states.

Speaking to Reuters from the fund’s Toronto office one year later, AimCo CEO Leo de Bever said the C$70-billion pension fund likes the kind of assets most investors avoid. Great Southern Plantations was owned by multiple investors and facing legal problems expected to take years to unravel.

According to de Bever, AimCo told Great Southern’s receiver it had both the cash and the patience to take it on, and as a result was able to snap up a massive amount of timberland “very cheaply.”

It was deal-making of a type Reuters noted may soon become typical as Canadian pension funds bail out government projects globally.

AimCo, which manages the pension assets of workers in Canada's energy heartland, is among a handful of Canadian pension funds capable of tackling problem investments that take creativity and expertise to resolve, reported Reuters.

De Bever believes some of those opportunities are likely to prevail in the infrastructure sector, because “a lot of governments are running out of cash" and looking for private sources of finance “to build power plants and sewers and water and roads and all that sort of thing."

De Bever, who joined AimCo in 2008 after a varied high-level business career, sees business opportunity in California, where AimCo has been close to investing in water treatment plants.

He told Reuters he was also keeping an eye on the U.S. electrical transmission network, which needs several hundred billion dollars to revamp its outdated infrastructure; and in emerging markets, where deals are arising as struggling European banks pull back from non-core projects.

However, de Bever is less enthusiastic these days about Latin America, where AimCo struck big deals in recent years in power lines and toll highways; he thinks the tide may be shifting in favor of investing again in North America.

The primary source of this article is Reuters, London, U.K., Jan. 13, 2012.

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