Stelmach government plans to create a new provincial Crown corporation

[Shodan]

Alberta eyes big earning gains
Up to $500M a year projected with new bill

Gary Lamphier
The Edmonton Journal

Thursday, March 22, 2007

EDMONTON - In a move predicted to earn up to an extra $500 million a year, the Stelmach government plans to create a new provincial Crown corporation to oversee $70 billion worth of financial assets.

The Edmonton-based investment powerhouse will be the fifth-largest pool of managed capital in Canada.

It would be exceeded in size only by the Caisse de depot et placement du Quebec ($143.5 billion), the Canada Pension Plan Investment Board ($111 billion), the Ontario Teachers' Pension Plan ($96.1 billion), and the B.C. Investment Management Corp. ($76.3 billion).

The proposed Alberta Investment Management Corp. will have its own CEO and board of directors. It's expected to be up and running by year's end, an Alberta Finance spokesman said Wednesday.

Under terms of a bill introduced in the legislature Tuesday, the Alberta Investment Management Corporation Act would turn the existing, in-house investment-management arm of Alberta Finance into a new, stand-alone entity with its own staff.

A search for a new head office location for AIM Corp. will start soon.

But a department spokesman said the shortage of available office space in downtown Edmonton is already posing some challenges. Finance Minister Lyle Oberg wasn't available for comment.

AIM Corp. would assume responsibility for managing the $16.3-billion Alberta Heritage Savings Trust Fund, several public endowment funds -- including the Alberta Heritage Foundation for Medical Research -- and a basket of public-sector pension funds.

The latter includes the $13.5-billion Local Authorities Pension Plan (LAPP), the province's largest public pension fund, and the $5.7 billion Public Service Pension Plan, among several others.

A recent study for the government concluded a stand-alone organization would be the best way "to achieve investment excellence," Alberta Finance said in a brief news release.

"The proposal follows best practices for top public sector investment funds such as the Canada Pension Plan, the B.C. Investment Management Corporation and the Ontario Teachers' Pension Plan."

With a more focused, mandated and streamlined approval structure, the government believes AIM Corp. could boost the net investment returns of the funds its manages by some 25 to 100 basis points a year.

If it boosted annual returns for the heritage fund by 10 basis points -- 0.1 per cent -- it would translate to an extra $16 million a year in net income. For all funds under its management, it would translate to a further $50 million a year.

At 25 to 100 basis points, that means potential increased returns of $125 million to $500 million annually.

As of Dec. 31, net assets held by the Alberta Heritage Savings Trust Fund totalled $16.3 billion, up $891 million for the latest quarter and up more than $1.46 billion through the first nine months of fiscal 2007. Excluding transfers into the fund, that represented an investment return of 7.9 per cent for the latest quarter, and 10 per cent for the latest nine months.

© The Edmonton Journal 2007

Copyright © 2007 CanWest Interactive, a division of CanWest MediaWorks Publications, Inc.. All rights reserved.

[Calgarian]

maybe this will help drive some of the office construction in Edmonton?

[Coldrsx]

"A search for a new head office location for AIM Corp. will start soon.

But a department spokesman said the shortage of available office space in downtown Edmonton is already posing some challenges. Finance Minister Lyle Oberg wasn't available for comment."



maybe this is the "LARGE PROV RFP" we heard rumours about....


hello boys, new tower:> WOOT WOOT

[CorporateWhore]

How much space would such a corporation need? It would be nice if it could kick-start some of the office developments that have been o the shelf for what seems like ages.

[Coldrsx]

Edmonton has 6 towers UC or in planning...that WILL happen...

[ExcaliburKid]

Excellent news for Edmonton :tup:

[Wooster]

Seems like a smart move. Good for Edmonton too.

[murman]

"A search for a new head office location for AIM Corp. will start soon.

But a department spokesman said the shortage of available office space in downtown Edmonton is already posing some challenges. Finance Minister Lyle Oberg wasn't available for comment."



maybe this is the "LARGE PROV RFP" we heard rumours about....


hello boys, new tower:> WOOT WOOT

The amount of office space for something like this could anything from marginal to huge.

The Caisse, in the usual QC fashion, built themselves an over-priced Taj Mahal that has roughly 600,000 SF leasable, IF IRC. They got some pretty visceral press over that one... Textbook definition of excess.

On the other end of the spectrum, maybe bcIMC: out of the core, low-rise, MAYBE 40-60,000 SF if I had to guess?

Also, in one fashion or another, various arms of AIM already exist. I'm guessing this will partly be a consolidation, plus some growth.

[chenmau]

Finally some sense in managing the Alberta's assets. This is a great idea, one that will hopefully pay dividends to future generations.

Edm could use the extra tower(s). Where would they put people until it's completed?

[JerryK]

Holly Man, this burg is really turning into something BIG:cheers: Just got back from T.O and took a drive downtown:worship: All the projects U/C or planned is amazing:whip:

[Coldrsx]

The amount of office space for something like this could anything from marginal to huge.

The Caisse, in the usual QC fashion, built themselves an over-priced Taj Mahal that has roughly 600,000 SF leasable, IF IRC. They got some pretty visceral press over that one... Textbook definition of excess.

On the other end of the spectrum, maybe bcIMC: out of the core, low-rise, MAYBE 40-60,000 SF if I had to guess?

Also, in one fashion or another, various arms of AIM already exist. I'm guessing this will partly be a consolidation, plus some growth.

40-60000 would be HUGE for us...:shrug:

[Kevin_foster]

"A search for a new head office location for AIM Corp. will start soon.

But a department spokesman said the shortage of available office space in downtown Edmonton is already posing some challenges. Finance Minister Lyle Oberg wasn't available for comment."

So - this could mean:
1) New Kickstart for one more tower

2) Move it to Calgary :)

3) Move it to Stelmacs home town!!

[Coldrsx]

if they cant find it now that means they need more than 25,000sqft....cause it is the largest A or AA space i found. (maybe missed?)

id guess this will be more like 250,000-400,000sqft.....and be a stand alone 25 storey tower like ING ish or 2/3 of a new 600,000sqft'r

[CanadianCentaur]

Hmmm, this is getting interesting for Edmonton.

[chenmau]

I hope they don't move it to Calgary. It would likely throw more fuel on the fire that is Calgary office space. And Edmonton could use another tower.

[vaportrail]

if they cant find it now that means they need more than 25,000sqft....cause it is the largest A or AA space i found. (maybe missed?)

id guess this will be more like 250,000-400,000sqft.....and be a stand alone 25 storey tower like ING ish or 2/3 of a new 600,000sqft'r

I'm not sure why you're figuring on the need for hundreds of thousands of square feet being required for the separation/expansion of an existing entity. That's space enough for a large quantity of government cubicles. Can you explain your reasoning?

[Coldrsx]

I'm not sure why you're figuring on the need for hundreds of thousands of square feet being required for the separation/expansion of an existing entity. That's space enough for a large quantity of government cubicles. Can you explain your reasoning?

nope, i really cant.

[CMD UW]

There are a couple of RFP's out there for some large space, from both private and public companies.

I've heard that there is a rather large RFP from a non-government tenant. Any guesses?

[Coldrsx]

There are a couple of RFP's out there for some large space, from both private and public companies.

I've heard that there is a rather large RFP from a non-government tenant. Any guesses?

stan told me to think tech

[big W]

Guys remember, that yes they will be moving from space they allready occupy but they will want to consolidate into one site and this will mean that they will want one large contigous block of office space at some point. Not sure how much they will need, but the requirement for space depends on how many employees they will need and expected growth over the next while. At this point I don't think anyone of us has a clue what it will be.

[mick]

I know an entity such as this really should be in A or AA in the financial core but don't forget we have the Devonian coming on line and the Professional buildings in a couple of years. Both of these have the space. At the least, they could serve as a temp home until a new AA tower is constructed.

[Me&You]

Is anyone else questioning the amount of return? $500M on $70B is less than 1%... inflation would eat this money in no time!

[Coldrsx]

Is anyone else questioning the amount of return? $500M on $70B is less than 1%... inflation would eat this money in no time!

and interest would do?

[Me&You]

and interest would do?

Not sure what you are asking?

[big W]

Is anyone else questioning the amount of return? $500M on $70B is less than 1%... inflation would eat this money in no time!

That would be an extra $500 million a year, over and above what is currently being acheived which is about 10% for the last 3 quarters of 2006.

[Me&You]

That would be an extra $500 million a year, over and above what is currently being acheived which is about 10% for the last 3 quarters of 2006.

Sorry, I just scanned the article. Understood. :banana:

[big W]

I think this will be the first step towards implimenting an Alberta Pension Plan as well. The Investment vehicle is in place and set up, then withdraw from the CPP and lower the pension plan premiums for Albertans but having one of our own due to the younger population in Alberta.

[JAH]

Man this is awesome news. I'd imagine a corporation this large would employ a large amount of staff. I hope this is a new tower in the making.. GO AIMS! What would be your best guess for where a new tower for AIMS would be located? Isn't there a Civic/gov't section as a part of the Jasper East plans? A nice AIMS tower there would be sweet.

[rapid_business]

How about Devonian? wouldn't they be interested there, or is that spoken for?

[CMD UW]

/\ Who knows...but there's lots going on right now.

[big W]

I am surprised no one commented on the Pension Plan as that will further fuel this funds growth meaning money for the fund. That in turn means more jobs and more office space. That will all be new and the Alberta Pension Plan was part of Stelmach's platform.

The other thing that is intresting is this move was not mentioned in any national paper, even though it created one of the largest funds in Canada and on top of that surplus money comes in allowing it to grow even faster. Plus since this is a crown corporation its revenues do not count towards equalization. THings could get very intresting in the next few years.

[e909]

I am surprised no one commented on the Pension Plan as that will further fuel this funds growth meaning money for the fund. That in turn means more jobs and more office space. That will all be new and the Alberta Pension Plan was part of Stelmach's platform.

The other thing that is intresting is this move was not mentioned in any national paper, even though it created one of the largest funds in Canada and on top of that surplus money comes in allowing it to grow even faster. Plus since this is a crown corporation its revenues do not count towards equalization. THings could get very intresting in the next few years.
Equalization has nothing to do with the provincial government giving the federal government money. So this would have no influence at all.

[mersar]

Correct, that there is one of the biggest misconceptions about the equalization process.

I'd have to agree that this is a very likely first step towards seeing an Alberta Pension Plan replacing CPP here, will be interesting to see what happens down the road once they are up and running.

[big W]

Guys read carefully. I never said the province gives money to the feds. Equalization is based on the ability of the government to generate revenue. The feds then use the taxes they collect and distribute accordingly. In the past they used the average of 5 provinces excluding Alberta and the 4 Atlantic provinces. Now the figure is all 10 provinces but only half of non renewable resource revenue. If this money is in a crown corp then, when the feds figure out the equalization numbers they would not look at this asset similar to how they discount half of the money for resource revenue. So the ATB or HydroQuebec revenues (profits that are distributed to the provincial government) are not counted by the feds in calculating equalization. THis new AIM Corp will be the same. SO yes by putting the money in a Crown Corp at arms length from the provincial government it does come into play when we consider equalization since all this will generate profit for the province but the feds will not use this in their equalization numbers. Meaning the numbers that go to the other provinces will be different if it is included or not. Essentually lowering ALbertas numbers and the overall average. In the end a smaller equalization pot to the provinces that do get it. No effect on Alberta but it will have one on the have not provinces.

[big W]

Should we start a thread regarding this crown corp in the Canada sub forum? It is very big news considering it would instantly be a huge corporation but not sure if the rest of the counrty would even care.

Once the APP happens (I am assuming that this is the next step) it would be national news as it would probably mean an increase in the Premiums that people in 8 other provinces would pay (Quebec already has a provincial pension plan). Intresting times.

[korinsensei]

NIce work Big W! Do you have a background in government finance, send me a PM when you have a chance. I remember you from the one meet we had like 3-4 years ago at the Martini bar on 109th with the group. I was the guy who lives in Japan, and still does.

Very interesting times indeed, and I would add.. WOW Stelmach is kind of Mandel like with using new and creative ways. Given this is not rocket science to financial experts but where was Klein on this...?

Did they pave the way, becasue it seems very soon to roll out this scheme...if Stelmach's Gov't is responsible than Kudos to him and his new posse...

[ibz]

Perhaps this could be the mystery non-government request rumour (250,000 sq ft) that was floating around? Sure its a crown corp, but not the same as standard govt space?

[big W]

It could be the mystery non government request for the 250K of space. One never knows.

Korinsensei you ask where is Klein in all this, well its Klein he was asleep at the wheel. I think he did admit he had no plan, basically was doing things by the seat of his pants.

[Shodan]

Alberta fund aims for $70-billion role in corporate sector
Massive pile of public financial assets available to pursue non-traditional investments

Gary Lamphier
The Edmonton Journal

Thursday, April 12, 2007

EDMONTON - It's about time.

Watch for Alberta Investment Management Corp. -- the soon-to-be-formed Crown corporation that will manage $70 billion worth of public financial assets -- to shed the Tory government's traditional cloak of secrecy, and begin openly flexing its muscles once it's up and running late this year.

Alberta Finance Minister Lyle Oberg says AIM Corp., which will have its own board of directors and CEO, will follow the lead set by giant funds, such as the $106-billion Ontario Teachers' Pension Plan, or the $48-billion Ontario Municipal Employees Retirement System (OMERS).

In other words, AIM will aggressively pursue non-traditional investments, such as major private equity deals, and play an active role in engineering big corporate takeovers, whenever and wherever the returns are justified.

At the moment, Alberta's major public sector pension and endowment funds, which are managed by Alberta Revenue's in-house investment management arm, are virtual no-shows in these areas.

Meanwhile, Teachers, OMERS and the $111-billion CPP Investment Board, among others, have ramped up their private- equity holdings. Teachers even orchestrated takeover bids for major public companies. Witness its current campaign to win support for a buyout of telecom giant BCE Inc.

At the same time, Oberg says the Tory government sees its proposed Edmonton-based investment firm as a key vehicle for driving growth in Alberta's financial services sector, which has remained underdeveloped and stunted despite the province's ongoing economic boom.

Hallelujah, I say. After years of drift under former premier Ralph Klein, the new Stelmach gang seems to have woken up to the fact that Alberta's energy wealth can be used as a lever to drive economic growth and diversification.

"What we hope happens is that we'll have more access to the private equity side. The vision of AIM is very much along the same lines as OMERS or Teachers -- to have a corporation like that centred here in Alberta," says Oberg, who was interviewed by phone Wednesday.

"On the investment side, what I'm hoping is that we can actually start an industry by having a $70-billion company centred here. So we're hoping there will be a lot of spinoffs on the financial side."

So what does that mean, exactly? Well, it could mean allocating funds to local investment managers, says Oberg. And it may also mean using AIM's sizeable financial muscle to pressure private sector investment firms in Toronto or elsewhere to set up shop in Edmonton.

At the moment, Edmonton is grossly undeveloped as a financial services centre, despite the presence of two successful regional banks -- ATB Financial and Canadian Western Bank.

Compared to cities like Vancouver or Calgary, which boast dozens of full-service investment dealers, fund management firms, venture capital pools and private equity funds, Edmonton barely registers on the financial services map.

That looks set to change.

"I see it (AIM) as a real positive, and a potential start for lots of things on the financial services side," adds Oberg.

"Seventy billion dollars isn't peanuts. So I would make the assumption that people would want to come here to woo AIM, as opposed to AIM having to go to downtown Toronto, and knock on the door and say 'Please sir, may we invest with you.' So I see it as a huge opportunity for us."

Oberg stresses that he isn't prejudging the investment policies of AIM's yet-to-be-appointed board.

But he expects its arms-length relationship with government will give AIM the kind of freedom and visibility that Alberta Revenue's investment management arm doesn't enjoy.

"We have to be careful, obviously. It's not our money, it's the taxpayers' money. So we do have to have an element of caution. But by freeing them up to utilize their expertise, and employing performance-based contracts, I think all of that is going to lead in the right direction."

Oberg says the search for a CEO remains at an early stage, although some potential candidates have come forward already. Asked whether former OMERS and ATB Financial boss Paul Haggis is among them, he laughs, but won't confirm.

"If we were to get someone like Paul Haggis, he certainly could be a poster boy for something like this. Will it be Paul Haggis? I have no way of knowing at this point in time. But that's the quality of people we're looking at."

Oberg doesn't expect much difficulty in finding a new home for AIM'S staff, despite the shortage of office space in Edmonton. Most of the 120 employees who work at Alberta Revenue's investment branch are expected to move over to the new Crown corporation.

"There are lots of places we could go. We don't need to go out and purchase a building or anything like that. But I certainly see it as an advantage to Edmonton to be here," he says.

Asked whether AIM might follow Teachers' lead, and one day engineer takeover bids for major public companies -- such as CN Rail -- as a means of pushing economic diversification, Oberg left the door open.

"Well, first of all, I won't bias any of their (the AIM board's) decisions about what they have the ability to do. And whatever they do it will have to make sound financial sense," he says.

"It has to show good payback and it has to be the right thing. But I would assume and I would hope that if they chose to do that -- and again, that's a huge if -- that there certainly would be some impetus to move the company to Edmonton or Calgary, or Alberta in general."

© The Edmonton Journal 2007

Copyright © 2007 CanWest Interactive, a division of CanWest MediaWorks Publications, Inc.. All rights reserved.

[ExcaliburKid]

Oberg doesn't expect much difficulty in finding a new home for AIM'S staff, despite the shortage of office space in Edmonton. Most of the 120 employees who work at Alberta Revenue's investment branch are expected to move over to the new Crown corporation.

"There are lots of places we could go. We don't need to go out and purchase a building or anything like that. But I certainly see it as an advantage to Edmonton to be here," he says.

So.....no new tower for AIM then?

[Coldrsx]

^maybe not, but a sizeable lease in existing at top notch rates:>

-----------------------

i liked this part best:

"On the investment side, what I'm hoping is that we can actually start an industry by having a $70-billion company centred here. So we're hoping there will be a lot of spinoffs on the financial side."

So what does that mean, exactly? Well, it could mean allocating funds to local investment managers, says Oberg. And it may also mean using AIM's sizeable financial muscle to pressure private sector investment firms in Toronto or elsewhere to set up shop in Edmonton.

At the moment, Edmonton is grossly undeveloped as a financial services centre, despite the presence of two successful regional banks -- ATB Financial and Canadian Western Bank.

Compared to cities like Vancouver or Calgary, which boast dozens of full-service investment dealers, fund management firms, venture capital pools and private equity funds, Edmonton barely registers on the financial services map.

[ExcaliburKid]

And it may also mean using AIM's sizeable financial muscle to pressure private sector investment firms in Toronto or elsewhere to set up shop in Edmonton.


And this is my favorite part from your favorite part haha

[tarapoto]

"A search for a new head office location for AIM Corp. will start soon.

But a department spokesman said the shortage of available office space in downtown Edmonton is already posing some challenges. Finance Minister Lyle Oberg wasn't available for comment."

So - this could mean:
1) New Kickstart for one more tower

2) Move it to Calgary :)

3) Move it to Stelmacs home town!!

They should just go ahead and move parliament down here too, you know, to make it official:haha:

[basilbrush]

/\The Parliament ain't here Junior.

[murman]

/\The Parliament ain't here Junior.

Junior, indeed. Not quite edjimicated yet, it would seem.

[Coldrsx]

^yes it is...

www.theparliament.ca

[basilbrush]

They can have that one.

[walli]

Isn't Penny Lane looking for a lead tenant? Why look for an additional building when a large project is already approved and doesn't yet have a lead tenant?

That's where I'd put it!

[ExcaliburKid]

^The HQ will be in Edmonton, plain and simple

[m0nkyman]

Federal Building? Could this be a reason to remediate it?

[big W]

They should just go ahead and move parliament down here too, you know, to make it official:haha:


I heard some guys in Calgary are getting a big ego but I didnt think they are going so far as to say they are the capital of Canada. Hell the so called centre of the universe has not done that.

[big W]

Isn't Penny Lane looking for a lead tenant? Why look for an additional building when a large project is already approved and doesn't yet have a lead tenant?

That's where I'd put it!

Wow I didn't know Edmonton had a project called Penny Lane? Where is the project proposed? Is it by the Legislature on 108 St?

[walli]

^The HQ will be in Edmonton, plain and simple

What is the reason for that? I mean, isn't this supposed to be arms length? If that is the case, a proper review for the best location should be conducted, instead of simply making such an important decision. The decision should consider where there is a greater investment banking community, and where there are larger (or any) exchanges.

[walli]

Wow I didn't know Edmonton had a project called Penny Lane?

No - unfortunately it is not in Edmonton as it is over 650'.