The $117bn (£76bn) pension fund that owns the UK National Lottery operator Camelot is set to expand into Asia, diversifying investment into some of the world's fastest-growing markets.
An industry source said that an "action plan for Asia is under way and at the proposal stage" with the board of the Ontario Teachers' Pension Plan (OTPP). At present, the group operates out of Toronto, New York and London, from where OTPP directs its extensive European operations.
However, Asia has been identified as a major area of growth, which is important as OTPP needs to make sure there is sufficient cash to fund the pensions of some 300,000 working and retired teachers in Ontario. At the moment exposure is relatively limited in countries such as China, India and Japan – for example, almost 90 per cent of its $11.5bn private equity arm's investments are in North America and Europe.
OTPP has been particularly focused on the UK, buying out Camelot for £389m two years ago, and is currently closing in on Goals Soccer Centres in a deal that analysts believe could be worth up to £77m. The Takeover Panel has given OTPP until 11 June to decide whether or not to go ahead with a bid for the East Kilbride-based five-a-side football operator. It has 43 centres in the UK, but the Canadians would look to open additional pitches in Europe.
A source close to the Goals proposal said: "Businesses like Goals are really interesting for OTPP, as there is an ability to grow the business internationally. Thematically, [companies like this] provide a lot of interesting opportunities."
There has also been talk of OTPP's plans to run six lotteries internationally by the end of the decade. An Asian expansion could mean Camelot would be able to identify countries where lotteries are not particularly advanced and then develop a market-leading position in those markets.
OTPP's switch of focus towards Asia would be worrying for the British government, which is relying on vast pension funds to help kickstart an infrastructure boom. OTPP has been one of the world's most important investors since the onset of the financial crisis, but many pension funds are sceptical about investing in the UK's capital projects.Reuse content