Senior Leadership Changes at Major Canadian Pension Fund After European Investment Setbacks
One of Canada's largest pension funds has experienced significant executive departures following substantial losses on key European infrastructure investments. The Ontario Municipal Employees Retirement System, commonly known as OMERS, has parted ways with two senior infrastructure executives in the wake of financial challenges involving Thames Water and another prominent European holding.
Executive Departures Follow Investment Challenges
According to sources familiar with the matter, Alastair Hall, who served as senior managing director for Europe, and Chris Hogg, a director overseeing digital infrastructure investments, have recently left the Toronto-based pension fund. These departures come after OMERS faced significant difficulties with two of its major European investments that have impacted the fund's performance.
Hall, who joined OMERS in 2014, was directly involved in the fund's investment in Thames Water, where OMERS held the position of largest shareholder. The pension fund made the difficult decision to write off its entire 31 percent stake in the troubled UK utility company during 2024, representing a substantial financial setback.
Deutsche Glasfaser Investment Complications
Hogg, who became part of OMERS in 2023, played a leading role in the fund's investment in Deutsche Glasfaser, a German broadband provider currently facing significant financial challenges. OMERS jointly acquired Glasfaser alongside EQT in 2020, maintaining a 49 percent stake in the company that has since required substantial financial intervention.
In December, OMERS and EQT proposed a comprehensive 1.7 billion euros refinancing arrangement to Glasfaser's creditors. This complex financial restructuring plan involved the owners injecting 1.1 billion euros of "preferred" equity in exchange for 600 million euros of "super senior" debt. Under this arrangement, holders of the "super senior" debt would receive priority repayment in any bankruptcy scenario, while "preferred" equity investors would gain precedence over previous equity contributions.
The shareholders have already committed approximately 4 billion euros to Glasfaser since acquiring the company from KKR in 2020. Last year, they were compelled to significantly scale back the company's ambitious expansion plans, reducing the original target of serving six million homes by 2032 to just 3.2 million households in an effort to control costs and stabilize operations.
OMERS Investment Portfolio and European Strategy
OMERS manages an impressive $141 billion in assets on behalf of 640,000 current and former public-sector and community workers across Ontario. The fund maintains substantial exposure to infrastructure investments, with approximately 22 percent of its portfolio allocated to this asset class as of June. Private equity represents 19 percent of holdings, while private credit accounts for 13 percent. European investments constitute a significant 18 percent of OMERS' total investment portfolio.
Despite these executive changes and investment challenges, sources indicate that OMERS remains committed to its European infrastructure strategy. The fund continues to explore strategic opportunities, including the potential sale of its 33 percent stake in Associated British Ports. This transaction, anticipated to conclude in the latter half of this year, could value the United Kingdom's largest ports operator at more than 10 billion euros.
OMERS has demonstrated ongoing activity in the European market, including the 2024 acquisition of Grandi Stazioni Retail, a network of Italian railway stations, in partnership with DWS. This investment suggests continued confidence in European infrastructure opportunities despite recent setbacks.
The pension fund's recent history includes the sale of its stake in London City Airport to Macquarie last year, a transaction conducted alongside Alberta Investment Management Corp. This followed Ontario Teachers' Pension Plan's divestment of its holding in the same airport to Australia's largest infrastructure investor in June of the previous year.
These developments highlight the complex challenges facing major Canadian pension funds as they navigate international infrastructure investments while balancing risk management and returns for their beneficiaries.
