OTPP's new strategy team targets hands-on improvements to drive returns amid shifting market realities
Driving profits by returning to “old-school private equity” is at the heart of Ontario Teachers’ Pension Plan’s (OTPP) latest strategy shift, as the fund refocuses on improving operating performance in its portfolio companies, according to Gillian Brown, Chief Investment Officer for public and private investments.
Brown made these remarks during an interview at the Bloomberg Canadian Finance Conference in New York.
As reported by Bloomberg, OTPP has created a dedicated Portfolio Solutions team, led by Kevin Kerr, to work alongside deal teams from the earliest stages of asset appraisal through to value creation and eventual sale.
This cross-asset-class group is tasked with identifying and executing on key levers of value, such as driving revenues and efficiencies, to deliver tangible operating results rather than relying on financial engineering.
This renewed focus comes as OTPP adapts to a more challenging investment landscape, with higher real interest rates and a re-rating of private market multiples.
Brown noted that the fund is scrutinizing how it generates returns from private assets, emphasizing the need to “refocus on the operating-company-level results” to drive value in today’s environment.
OTPP’s approach is underpinned by its “all-weather portfolio” construction, designed to withstand varying growth and inflation scenarios.
According to Brown, the fund takes active risk only in areas where it believes it has a true edge, leveraging its long history and capabilities in private asset investing.
This has positioned OTPP as a sought-after partner in the market, providing access to a broad pipeline of opportunities and insights from both direct and fund investments.
In response to market complexities and a prolonged deal drought, OTPP has also indicated a preference for partnerships over full ownership of companies, aiming to mitigate risk while maintaining flexibility in its investment approach.
Brown further highlighted the fund’s efforts to bring real estate management in-house, moving away from external oversight by Cadillac Fairview. This transition supports a more dynamic investment focus and aligns with OTPP’s broader strategy of being both a buyer and seller in global markets .
On the technology front, Brown said OTPP is actively integrating artificial intelligence into its processes, particularly for data analysis, market scans, and internal communications.
The fund is working to enhance its data infrastructure to unlock greater value from decades of investment experience, while also monitoring potential disruption and return opportunities within its private asset holdings.
