Recruiting the right talent has been comparatively less complicated. According to de Bever, AIMCo’s size and its focus on creating cost efficiencies through the internal management of assets have allowed the organization to offer performance-based compensation packages that are competitive with those of the private sector.
The size of the fund also allows AIMCo to bring in investment professionals looking to work with larger portfolios than they’d be exposed to at some private management firms.
“I’ve been able to attract former Albertans who were in New York, London or elsewhere, who wanted to come back. And I’ve been able to attract others who had no ties to Alberta, but for whom this was an opportunity that gave them more responsibility faster than they could earn anywhere else. There aren’t too many of these kinds of opportunities around,” says de Bever.
Since starting in 2008, AIMCo has grown from 138 employees to 260 as its internal asset management capacity has increased. De Bever says that with most of its team now in place, AIMCo can shift the focus from attraction to retention, by ensuring that it continues to be competitive on compensation and by presenting staff with development opportunities (the organization allots $5,000 annually per employee for education).
“Over the next three years, that will be a major focus,” he explains.
Capital ideas
De Bever says AIMCo has a focused eye toward resource (food, energy, materials) and infrastructure investments. Given that the organization’s Edmonton base lies in the heart of one of Canada’s fastest-growing and resource-rich regions, it would seem natural to invest in its home province.
But AIMCo realized early on the potential perils of such decisions. De Bever is familiar with one of the management firm’s first investments, Calgary’s Precision Drilling Trust, from his days as senior vice-president, research and economics, with the Ontario Teachers’ Pension Plan, which owned a stake. When AIMCo took the opportunity to buy into the debt-challenged company at an attractive price, critics called the move a politically motivated bailout. Precision’s shares have tripled in value over the ensuing three years, dampening the criticism, but the hard lessons remain with de Bever.
“Investing in your own jurisdiction, particularly if it’s a small one, tends to attract a level of second-guessing.”
As its internal intelligence builds, AIMCo has increased its focus globally. De Bever says growth in Asia and Latin America is creating interesting opportunities. He points to Chile, where AIMCo has recently made two major infrastructure investments: a 2010 play for a 50% ownership in toll road operator Autopisa Central, and last November’s purchase of a 50% stake in Grupo SAESA, a regulated electricity transmission and distribution company (Teachers’ owns the other 50%).
“We look across the world, and we look for jurisdictions where our capital is welcome,” explains de Bever. “Chile realizes it needs this kind of capital to build its social infrastructure, and it is willing to provide reliable contracting provisions around the investment.”
So far, the groundwork laid by de Bever and his team is showing results. The fund returned 8.2% overall for the fiscal year ending March 31, 2011, including a 10.3% return on pension and endowment assets. AIMCo also had a $9.4-million reduction in external management fees for the year, as it moved more assets to internal management. De Bever thinks this year could be even better: AIMCo stands to nearly double its investment in Viterra, following Glencore International’s recent $6.1-billion purchase of the company.
“The joke I make is that if you get it right 55% of the time consistently in investment management, you’re a first-quartile performer,” he says. “You wouldn’t want to run an airline on that basis. But, in investment management, that is the reality.”
Neil Faba is associate editor of Benefits Canada. neil.faba@rci.rogers.com
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