AIMCo Will Beef Up Its London Office to Invest More in the UK
One of Canada’s largest asset managers plans to more than double its headcount in London and invest billions in the UK, hailing the city as more of a gateway to the world than New York.
The Alberta Investment Management Company’s vote of confidence in the UK capital defies the prevailing gloom over the country’s international attractiveness post-Brexit amid concerns that London’s position as a pre-eminent financial centre for international capital is at risk.
AIMCo, which manages $120bn on behalf of Alberta’s wealth fund and pension funds, told the Financial Times it planned to increase its London headcount from 30 to 80 over the next few years and invest “billions” in the UK, including on projects linked to the country’s “green industrial revolution” policy.
“Being in London is a much more significant step towards Asia than New York would be,” said chief executive Evan Siddall. “It’s a much more significant step towards eastern Europe than New York. It’s a much more significant step towards Africa than New York would be.”
One of the Maple Eight Canadian pension fund managers that collectively manage about C$2tn ($1.5tn) in assets, AIMCo has in recent years significantly increased its overseas exposure, with the proportion of its portfolio invested in Canada falling from 80 per cent to 45 per cent since 2013.
“I think there was a certain ‘we’re Albertan and we’re going to stay here’ pride. I’d call it a little parochial,” said Siddall, who became AIMCo’s chief executive in 2021.
The company’s UK plans follow similar moves by other large global investors including $102bn Australian superannuation fund Aware Super, which is opening its first London headquarters later this year.
AIMCo’s move to boost its British presence comes as UK pension funds face growing pressure to step up their domestic investment.
A recent report by the Tony Blair Institute, a think-tank set up by the former UK prime minister, found that overseas pensions invested 16 times more than domestic pensions in British venture capital and private equity, despite the UK having one of the world’s biggest pension markets.
The report suggested the UK incentivise consolidation among its pension funds in order to benefit from economies of scale, similar to the Canadian model.
Siddall said that even after Brexit London remained one of the world’s two principal financial centres.
“Long-term capital should be in London,” he said, adding that the city was “also a more cosmopolitan place” than New York. “And the pound sterling is still one of the world’s reserve currencies, which is an incredible asset for the UK that I think some people take for granted.”
The fund already has investments in the UK. It is part of the consortium that owns London City airport and has invested in the redevelopment of the BBC offices in White City and in logistics centres across the country.
While the UK government is not doing much to shore up the attractiveness of the capital, according to Siddall, its investments in the green transition provide an opportunity for “long-term patient capital”.
“We’ve been spending the last year and a half looking at transition finance opportunities as a long-term capital provider. There’s money to be made off of climate transition for sure.”
The UK plans are part of a big international push by AIMCo, which said it wanted to invest C$3bn-C$5bn outside of Canada in the next year. It also plans to open an office in Singapore this year and is aiming at further investments in Asia, where Siddall admits AIMCo is “way underweight”.
However, the fund will continue to avoid investing in mainland China — echoing the caution of other Canadian funds that are reducing or reassessing their exposure to the country. “We have a watching brief on China,” said Siddall, citing “currency risk, political risk, rule of law”.
On the question of whether governments can or should compel pension funds to support political priorities, as has been suggested in the UK, Siddall said: “We get the same pressure in Canada. Our obligation is to maximise returns for our beneficiaries.
“We’re going [to] invest in the world to do that. Why would we confine ourselves to one particular geography? Because the broader we invest, the more opportunity we have.”
Good interview with Evan Siddall in the FT and I wanted to post it here with some comments.
First, by beefing up in London office, AIMCo is following other large Canadian peers that have significant presence in that city.
Canada's large pension funds have been important investors in the UK for over a decade.
In fact, it was over ten years ago that the Telegraph wrote an article on the Canadian pensioners who own Britain.
Having an office in London is sort of a status symbol among Canada's large pension funds.
No serious private equity fund or hedge fund would take you seriously if you didn't have an office there.
Boots on the ground means building a strong network and sourcing deals.
You simply can't do this working out of Toronto, Montreal, Edmonton, Calgary or Victoria.
It's the same thing with New York City, you need an office there too but I agree with Evan, London is more cosmopolitan, a gateway to Eastern Europe and Africa and will remain the epicenter of finance for decades.
As noted in the FT article, AIMCo already has investments in the UK. It is part of the consortium that owns London City airport and has invested in the redevelopment of the BBC offices in White City and in logistics centres across the country.
AIMCo owns London City airport with OMERS, Teachers' and other sin the consortium that bought it.
This morning, OMERS CEO Blake Hutcheson posted this on LinkedIn:
It was a pleasure to meet Robert Sinclair, London City Airport’s CEO, earlier today and to see first-hand the upgrades underway at the airport to improve the passenger experience. OMERS has been a proud co-investor in the airport since 2016.
Thanks to the commitment of the team, London City was the first major UK airport to install next generation CT security scanners, meaning passengers no longer need to take laptops, liquids or other items out of their bags. Modernization of the departure lounge is also underway, along with improvements to the runway and taxiing areas to enhance the efficiency and safety of the airport’s operation. It’s these initiatives that help to maintain the airport’s very strong customer satisfaction scores – and the highest Net Promoter Score of all London’s airports in 2022.
While the pandemic has been tough on the sector, it’s great to see our airport bouncing back now. Thank you to Robert and the whole team for all your hard work – please keep it up!
Anyway, back to AIMCo's international exposure, it needs to beef it up.
If you look at the Executive Team, you'll see CIO Marlene Puffer who joined from CN Investment Division and David Scudellari who joined AIMCo from PSP where he headed Credit and PE.
They will work closely with Peter Teti (Private Equity), Ben Hawkins (Infrastructure) and Paul Mouchakkaa (Real Estate) to beef up AIMCo's international presence.
They don't have a choice. AIMCo lags its large peers in terms of investments in key geographies like Asia and Evan Siddall and his team have put a plan together to rectify this.
Below, Sky News reports while the UK may avoid falling into recession this year, the recent set of economic data points to hard times ahead.
There will be plenty of opportunities in the UK over the next five years in all sorts of sectors, including the transition economy, and Canada's large pension funds need to be prepared to capitalize on those opportunities as they arise.
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