With governments around the world preparing to hold yard sales to raise cash, Michael Nobrega has his piggy bank ready.
The chief executive officer of the Ontario Municipal Employees Retirement System said his fund, one of Canada's largest, has been liquidating holdings to ensure it has the cash to take advantage as the public sector sells off assets to rein in massive deficits.
"I think at some point in time, the governments have to dispose of assets," Mr. Nobrega said.
"And if we're not liquid, if we don't have the resources at hand to take advantage of that, then we would not be able to reach out for them."
The first targets could be in Ontario, where provincial government officials have confirmed they are examining the possibility of selling stakes in assets such as the Ontario Lottery and Gaming Corp., the Liquor Control Board of Ontario and electricity generation and distribution companies Ontario Hydro and Hydro One.
He would not comment on which of the Crown corporations OMERS would prefer to bid on, saying he is interested in "all the assets going."
Another anticipated seller is the British government, where Prime Minister Gordon Brown has announced a plan to sell up to $25-billion (U.S.) in government assets to cut the country's budget deficit by half over the next four years.
The largest privatization since the Thatcher era could see assets such as the English Channel rail link and the ferry port of Dover sold to global buyers.
Mr. Nobrega said other opportunities "will inevitably arise" as major countries such as the United States and Japan accumulate "unsustainable" debts that exceed more than 100 per cent of their gross domestic products.
Most government deals would be done with a consortium of investors because the assets are so large, he added.
"They'll be either outright sales or partnerships with governments," he said.
OMERS, which invests pension assets for municipal government employees, yesterday reported a 10.6-per-cent return on its investments in 2009, a turnaround from a loss of 15.3 per cent in 2008.
The fund's asset base grew by $4.3-billion to $47.8-billion at Dec. 31.
The fund is the second major pension plan to report its 2009 financial results.
Last week, the Caisse de dépôt et placement du Québec reported a 10-per-cent gain on its investments last year.
Both funds lag the median 15.5-per-cent return posted by large Canadian pension funds in 2009, according to a survey by RBC Dexia Investor Services Ltd.
OMERS chief financial officer Patrick Crowley said the fund reduced its holdings in public equities in early 2009 as part of a longer-term plan to shift more into private investments, including infrastructure assets, real estate and private equity holdings.
The fund currently has 61 per cent of its assets in public debt and equity markets and 39 per cent in private holdings, but plans to reduce the public component to 53 per cent in the next few years.
While most of the fund's asset classes posted better returns in 2009, the real estate division - Oxford Properties Group - saw returns fall to 1.3 per cent from 6.7 per cent in 2008.
Mr. Crowley said the decline was due to a writedown in asset values on hotel and industrial properties because of mark-to-market accounting rules.
OMERS also said its pension fund deficit grew last year to $1.5-billion at Dec. 31 from $279-million at the end of 2008 because pension obligations grew at a greater pace than investment returns.
Mr. Nobrega said some of the deficit will be made up through investment returns.
However, he said it is up to OMERS's sponsors to decide whether to also increase member contributions or change the plan's design to deal with any remaining shortfall.