This year has seen uncertainty and volatility, but despite the market conditions it has been a high activity year for our team at OMERS Private Equity both in terms of transaction velocity, and in creating value across our portfolio.
There are many things top of mind as we navigate through what is now a markedly different world than just a few months ago. Global markets (debt and equity) are in flux, with inflation in many countries at record highs and a potential recession causing uncertainty. Debt is more expensive and there are fewer capital sources lending than last with the syndicated loan market largely closed. Overall, these factors are causing (necessary) cooling in the PE industry. There is a growing reluctance by many of our peers to “spend up” or to deploy new capital at all in the last half of 2022.On the positive side, our portfolio continues to perform well, with most companies showing strong growth in 2022. And many PE funds still have high levels of dry powder, but they are cautious on valuations and assets that aren’t traditionally recession resilient and are looking for “super quality” companies to acquire. We like this turmoil and see it as a buying opportunity – for new platforms and for add-ons to the portfolio. We continue to explore investments in recession resilient industries, [see our robust list of deals closed below], as we look for quality long-term investments (as always!) on behalf of our pensioners.
So far this year, we have completed seven new investments, and plan to continue to deploy capital. We began our direct investing program during the time of the 2008 financial crisis and are well-positioned to invest in any market. In times like these, our position as a long-term investor with access to evergreen capital gives us an advantage over other players in the market. We recently announced three new platform acquisitions including Network Plus and Bionic in the UK, and US-based Pueblo Mechanical Services as well as a minority growth investment in US based NovaSource Power Services. We are excited to partner with their world-class management teams to implement bespoke strategies that drive further growth while preserving the distinctive aspects of their businesses that made them world-class to begin with. You can read more about our recent deal activity here.
One way that we’ve evolved our portfolio support capabilities is through our newly created debt capital markets function run by Managing Director, Tyler Craig. This function speaks to the maturity and growth of the direct investing program at OPE. Tyler and the team have been busy these last few months and you read more about what they’ve been up to here.
While we’ve been busy growing our portfolio, we’ve also been busy growing our team. This year, we’ve added 10 new members to the OPE team in all four of our offices to better support our global transactions and asset management capabilities.
All in all, we are optimistic about the remainder of 2022 and beyond. We have a deep and experienced team, an established, differentiated strategy and I believe this combination of characteristics positions us well to continue delivering results on behalf of our half a million members.
We look forward to continuing our partnership and hope to see you soon.
Mike Graham, Global Head of Private Equity