Rising inflation, interest rates and geopolitical risk have injected uncertainty into the market over the last year, making it a more difficult dealmaking environment than we’ve seen in years. The level of caution evident among PE firms is as high as we've seen since the GFC. Despite this uncertain backdrop, OMERS Private Equity (OPE) showed strength across our business.

At the midpoint of 2022, OPE generated a net return of 7.7% on our private equity investments – showing remarkable resiliency as leading global investment market indices declined well into the double digits. Strong operational performance powered our mid-year return – with businesses across our portfolio growing their earnings organically and through acquisitions. Supporting our portfolio continues to be a top priority, particularly in uncertain times and an unstable debt market.

We are confident that when our 2022 year-end returns are published at the end of February, it will be a positive news story. And, when it comes to 2023, we are excited about the opportunities an uncertain market will bring our way.

We finished last year with 7 net new transactions, as well as 133 add-ons across the portfolio. Most recently, OPE announced that we entered into an agreement to sell our majority stake in Trescal, a France-based calibration company that we acquired in 2018. Since our initial investment, Trescal has doubled in size, completed 47 acquisitions, and entered into new markets. It’s the perfect example of our buy-and-build strategy in action, and we are excited to be a part of Trescal’s continued growth and evolution with our re-investment following the transaction’s close.

In August, we announced our acquisition of Pueblo Mechanical & Controls, an industry-leading commercial HVAC and mechanical services provider. In partnering with Pueblo, we incorporated successful growth strategies that we developed for other companies in the portfolio, including TurnPoint, a residential HVAC player that we acquired in 2020. In 2021, we helped TurnPoint complete 21 acquisitions that enabled the company’s westward expansion. In sharing the lessons learned from our partnership with high growth service companies, we are giving Pueblo a blueprint for expansion into new geographies and specialty areas.

We are proud to serve as a trusted partner in helping our portfolio companies unlock their full potential and reach new heights. Our deep experience across a range of sectors enables us to provide our companies with lessons learned from previous experiences to maximize their growth opportunities. You can read more about our work with Pueblo and TurnPoint in The Deal.

In 2022, we also bought a minority interest in NovaSource, a global leader in solar operations and maintenance services for utility, commercial, industrial and residential customers. This investment combines our deep experience with services-based business with our long-term thematic approach. We’re excited to work with the company as it supports the global energy transition by maintaining critical clean energy assets. You can learn more about our investment here.

We are also pleased to see many of our existing team members rise within our ranks and take on new challenges. In particular, we were excited to announce that Helen Rattee became OPE’s first Managing Director of ESG & Portfolio Thematics. Helen joined OMERS in 2011, holding various roles in strategy and risk. In her new role, Helen is helping our companies enhance their ESG profile with the aim of realizing material value creation through ESG practices. You can read more about Helen’s work and OPE’s ESG philosophy here.

OMERS Private Equity kicked off the New Year with renewed strength, conferred to us by the tremendous new joiners at all levels of our firm – 15 in total in 2022. Looking forward, we believe that there are great investment opportunities throughout the market despite the murky outlook. In times like this, it is important to remember that we have the ability to deploy capital for the long term, which helps us withstand volatility in the near term. While we expect that many of our peers will wait out the current market conditions, OPE has a strong balance sheet and is eager to explore promising new partnerships.

Mike Graham

Global Head of Private Equity