OPTrust’s private markets program was launched in 2005 to build diversified private equity and infrastructure portfolios that will eventually account for 10% and 15% of the Plan’s assets, respectively.

Infrastructure and private equity
Infrastructure investments include regulated assets such as water, gas and electric utilities; transportation assets such as toll roads and airports; and long-term contracted assets like power-generating plants. Private equity encompasses a wide range of investments, including buyouts, venture capital, credit opportunities and special situations financing opportunities.

The expected benefits of investing in private equity and infrastructure include:

• improved diversification and lower volatility of plan returns, since private markets and public stocks and bonds do not necessarily move in the same direction at the same time
• higher risk-adjusted returns than public equities, due to the direct involvement of the Plan’s internal portfolio managers in structuring deals and in the ongoing management of the assets
• better matching with the Plan’s indexed pension liabilities due to the inflation protection of infrastructure investments, which results from the regulatory and contractual frameworks supporting these assets.

Private Markets Group
The program is managed by OPTrust’s Private Markets Group, an internal team of investment professionals with extensive international experience. Reflecting the program’s scope, the team is equipped to invest on a global basis in both asset classes and through various types of private market transactions, including fund investments, co-investments, secondary investments and direct investments.

At the end of 2008, OPTrust’s infrastructure and private equity portfolios had reached a net asset value of $347 million and $340 million, equal to 3.2% and 3.1% of the fund respectively.

In 2008, OPTrust invested in Porterbrook Capital. Porterbrook Capital is a rolling stock leasing company which owns and leases passenger and freight trains in the United Kingdom. Our Private Markets Group sourced this co-investment in a proprietary transaction and completed this investment in a very challenging capital market environment.