The retirement system took a 100% stake in the energy firm, Ontario Teachers’ said Monday. The acquisition has netted the pension fund seven electricity transmission lines that service consumers and businesses across 10 states in Brazil. The firm was founded by TPG just three years ago.
“Our strategy focuses on allocating significant capital to high-quality core infrastructure assets with lower risks and stable inflation-linked cash flows,” Dale Burgess, senior managing director of infrastructure and natural resources at Ontario Teachers, said in a statement. “Electricity transmission businesses are particularly attractive given their importance in facilitating a transition to a low-carbon economy.”
The pension fund has invested in other electricity distribution companies recently. In March, Ontario Teachers’ took a 40% stake in Finland’s Caruna. For more than a decade, it has maintained a 50% stake in Chile-based transmission firm Saesa.
The investment into Evoltz demonstrates Ontario Teachers’ growing portfolio in Brazil and Latin America. In 2016, the firm, with the Canada Pension Plan Investment Board (CPPIB), invested in toll roads in Mexico. They took a 49% stake with Latin American infrastructure group IDEAL.
Evoltz, which delivers renewable energy, will also help decarbonize the pension fund’s portfolio. In January, the fund pledged to reach net-zero carbon emissions by 2050. Last year, Ontario Teachers’ issued its first green bond offering. The $890 million 10-year bond will help the retirement system fund sustainable investments.
However, Ontario Teachers’ has also received criticism for its investment into parts of Abu Dhabi’s gas pipeline network. Last summer, it joined other institutional investors in investing $10.1 billion for a 49% stake.
As of December, Ontario Teachers’ reached a portfolio with C$221.2 billion (US$182.5 billion) in assets. Since 1990, the fund has maintained a 9.6% annualized return. Last year, it missed its benchmark with an 8.6% return.
The pension fund expects the deal will close later this fall, pending closing conditions and regulatory approvals.