Giant Ontario Teachers’ fund pondering salmon

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The Ontario Teachers’ Pension Plan, one of the world’s largest institutional investors, has said it will have to evaluate the “risk-reward” of salmon-farming after making its first-ever aquaculture acquisition this week.

That evaluation could take time.

“This acquisition, including sector research and origination activities, was 36 months in the making and marks an important piece of the platform to be able to go out and add to the portfolio,” the CAD180.5 billion fund’s managing director, Stephen McLennan, wrote in a letter to Salmon Business.

The fund on Friday invested in Prince Edward Island’s Atlantic Aqua Farms, the largest grower of live mussels in North America. After taking up a large post in the company, Ontario Teachers’ sounded like the industry it seems ready to be a part of: “Demand for protein is increasing, and in the context of land constraints and environmental considerations, aquaculture is among the most sustainable sources to meet this demand.”

The Toronto-based Fund couldn’t answer all our questions about the attractiveness of buying into salmon, but it said the AAF acquisition was about getting into “a proven operator with scale in (the) particular segment and we would look to be using them and their experience to grow the ultimate allocation to aquaculture,” Mr. McLennan said.

Concentration of ownership in one industry didn’t seem to rattle the fund, the exec said. Its managers were more concerned about ownership’s core competency. Asked to get specific on salmon he said, “In future we could be open to considering other species and really would have to think about them in terms of a risk-adjusted return with consideration of all potential risk factors. It is too early to say exactly what we will be focused, except to say that this is a very interesting area and we’ll continue to focus on the upstream, food production element of things.”

The Ontario Teachers’ Pension Plan is Canada’s largest single-profession pension plan. Known for its careful investments, it has earned an annualized gross rate of return of 10.1 percent since 1990. The defined-benefit plan invests and administers pensions of the Canadian province’s 318,000 active and retired teachers.