Monday, October 25, 2010

Opportunities for Canada's pension funds

The UK is under severe financial distress, or so thinks the current government.

As a result the British government is looking at ways to lessen their financial problems. Like all governments in times like these they look at selling assets to help pay for the high costs of the public sector and its pension liabilities. One way the UK is looking at raising funds is by selling the forest of Britain. Most of these forests will end up in the hands of Canadian pension funds. 
MSN picked up the news and reported on it in Britain plans huge sell-off of forests in bid to cut deficit 
Britain's government will soon unveil plans to sell around half of the woodlands it oversees, paving the way for a huge expansion in holiday resorts, golf courses and commercial logging operations, The Sunday Telegraph reported.
Environment Secretary Caroline Spelman will unveil the plans to dispose about 50 percent of the 748,000 hectares (1.85 million acres) of forest within days, according to the newspaper.

Laws overseeing so-called ancient forests, such as the Forest of Dean and Sherwood Forest, are most likely to be changed to allow companies to cut down trees, according to the Telegraph.

"We are looking to energize our forests by bringing in fresh ideas and investment, and by putting conservation in the hands of local communities," a source close to the Department for the Environment Food and Rural Affairs (Defra) told the newspaper.

A third of the land will be sold before 2015, and the rest by 2020, a government source told the newspaper.
Legislation dealing with forests dates back to the Magna Carta, which was forced onto King John in 1215 and formed the basis for English law, the newspaper reported.
Boon for Ontario Teachers
One pension fund ready to jump at the opportunity is the Ontario Teachers Pension Plan (OTPP). they rub their hands together over opportunities like this. These investments produce high level and long term profits. Best of all they do not have to disclose any of their dealing with these assets. They come under the umbrella of private equity. 

Ontario Teachers has privatized many assets that are capable of producing 20% to 25% returns. These are fantastic returns in times like this.

OTPP already has a big foot in the door in the UK.It has purchased many former government assets already and will be eager to get more onto their books. 

Teachers has made a big purchase of New Zealand forest and will be familiar with the steps need to acquire the forests of the Britain. Ontario Teachers Buy New Zealand Forests 
A group including Ontario Teachers' Pension Plan and Boston-based Prudential Timber Investments Inc. agreed to buy 106,000 hectares of trees from Fletcher Challenge Forests Ltd. for NZ$725 million ($469 million) 
Foresters such as Fletcher are selling forests to concentrate on more profitable timber mills and distribution as the local dollar's surge, 23 percent this year, erodes the value of export log sales. Investors such as AMP Capital Investors (New Zealand) Ltd.'s Nat Vallabh say the North American funds can take a longer-term view of their investments. 

The forest ``is regarded as one of the best plantation forests anywhere in the world,'' said Ian Jolly, a New Zealand spokesman for GMO Renewable Resources, investment adviser for Harvard Management Co. New Zealand has 1.8 million hectares (4.4 million acres) of forest
 As well as forests Teachers is familiar with assets in the UK.

It has several other investments in the UK as well. So expect to see more activity in these types of acquisitions. It has no shortage of cash from Ontario taxpayers. 

Teachers has over $96.4 Billion accumulated assets for its 289,000 teachers and retirees. This contrasts with the Canadian Pension Plan (CPP) that which has $129 Billion for 18,000,000 working Canadians. 

Bill Tufts 
Fair pensions For All 

No comments:

Post a Comment