Ontario Teachers rewrites ABCs of investing

Fri Jan 13, 2012 1:44pm EST
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By Pav Jordan

TORONTO (Reuters) - As Jim Leech contemplates his fund's strategy for expanding around the world, he needed only to remember how his massive Ontario Teachers' Pension Plan parachuted into Brazil's then-nascent investment market less than a decade ago.

Teachers' recipe was simple: identify a promising market, lay the groundwork and, years later, reap the rewards with the inside track on money-making projects.

The C$110 billion ($107 billion) fund's ambition is to replicate its Brazilian success elsewhere, though for now Leech won't disclose exactly where.

What's certain is the basic game plan.

In Brazil, Teachers sent its experts into the country for two weeks in 2005 to get the lay of the land. The team came away convinced that a rising middle class would keep powering South America's largest economy ahead.

"I can vividly remember the trip when the fixed income guys, after meetings with all sorts of finance ministers, decided that Brazil was going to get investment grade faster than the world thought it was," Leech told Reuters in a wide-ranging interview from his offices in Toronto, Canada's financial hub.

After the decision was made to focus on Brazil, Teachers began the hard work of building up an extensive network of relationships in the country.

"That's where we met Eike Batista," Leech said, referring to a 2006 cocktail party and dinner attended by Batista, a Brazilian billionaire with a global portfolio of mining and oil properties.   Continued...