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Full Plate for Teachers' New Private Equity Head?

Submitted by Leo Kolivakis on 10/02/2010 07:14 -0400

Tara Perkins of the Globe & Mail reports, A full plate for Teachers’ new private equity head:

The
new head of the Ontario Teachers’ Pension Plan’s $10-billion private
equity portfolio will have to hit the ground running when she assumes
the position in mid-October.

Jane Rowe, who spent more than two decades at Bank of Nova Scotia,
steps into the role at a time when Teachers is looking at selling one
of its key holdings and taking another public. At the same time, the
overall private equity sector is still struggling to bounce back from
the financial crisis. Private equity returns have been improving, but
lag behind those of the public markets, according to London-based
Preqin.

A Newfoundland
native, Ms. Rowe joined Scotiabank’s corporate banking division in 1987
as an account manager and rose through the ranks to become executive
vice-president of special accounts management and retail credit risk.
She will leave the bank effective Oct. 14.

She is
filling a gap that opened in April, when Teachers’ former head of
private equity Erol Uzumeri resigned to start his own money management
firm.

Meantime, one of Teachers’ key holdings, GNC Acquisition
Holdings Inc., is preparing for an initial public offering, and
Teachers’ has put GCAN Insurance Co. on the auction block, according to
sources.

Intact Financial Corp. is believed to be among the
prospective bidders for GCAN, a list that also includes a number of
foreign insurers and financial players.

Teachers’ Private
Capital bought GCAN in 2005 from a consortium that included Canadian
private equity firm Torquest Partners Inc. and CIBC Capital Partners.
At the time, Teachers chief executive officer Jim Leech called the deal
an “exciting new opportunity” for Teachers to invest in the insurance
sector.

GCAN was established in 1955 by the Gerling Insurance
Group and is now a leading Canadian industrial and commercial insurer.
It had $851-million in total assets at the end of 2009, up from
$738-million in 2008, and earned $27.9-million last year, up from
$17-million.

As that potential sales process plays out,
nutrition retailer GNC has filed documents with U.S. regulators paving
the way for an IPO. Teachers and Los Angeles-based private equity firm
Ares Management LLC bought Pittsburgh-based GNC in 2007 in a deal that
valued the retailer at $1.7-billion (U.S.). GNC’s previous owner,
Apollo Management LP, had tried to take the vitamin chain public but
was never able to get an offering off the ground.

Following
the IPO, Ares and Teachers will continue to hold more than half of the
class A common stock of GNC and will have the power to control its
affairs and policies, including the election of directors, the company
said in documents filed this week with the U.S. Securities and Exchange
Commission.

GNC, which earned $51.1-million (U.S.) in
the first six months of this year, up from $37.4-million in the same
period a year ago, said it’s undergone a number of changes in recent
years. Those include an increased focus on proprietary products, a
revamped e-commerce business, and upgraded point-of-sale systems. As of
the end of 2009, the retailer had 167 company-owned stores in Canada
and 1,307 franchised stores in 47 countries. It’s looking to expand its
international operations, including plans to enter China.

Ms. Rowe replaces Erol Uzumeri, who left Teachers in May to form a new private equity firm Searchlight Capital Partners
with Eric Zinterhofer, the the former co-head of media and telecom for
Apollo Management and Oliver Haarmann, Kohlberg Kravis Roberts &
Co.'s head of European communications and media.

One senior PE pension officer had this to share with me:

She is a great golfer! I don't know her well, but suspect she is a people manager who rotated through many of the bank's operations, and has some work out experiences, playing the heavy on Canwest gave her profile. Probably the right skills for the OTPP given a difficult portfolio legacy that will take years to roll off, and the team is large and could use some leadership.

I don't know
her either, but I like Newfoundlanders and I am glad to see another
woman in charge of a major division of a large Canadian public pension
fund. The most impressive senior officer I ever worked for was Edmée
Métivier, Executive Vice President, Financing and Consulting at the Business Development Bank of Canada
(BDC). She is simply the most outstanding senior manager I ever had the
privilege of working with -- smart, competent, hardworking, great
leadership and especially people skills.

Ms. Rowe has her work
cut out for her, but if I were her, I would contact Edmée and see how
Teachers' Private Equity can work with the BDC on various mid-market
deals in the Canadian space. I would also contact a couple of other
senior PE officers in Canada, including two of her fellow
Newfoundlanders working at PSP Investments.

She has to deal
with legacy issues, which are going to weigh on the portfolio for a
while. She definitely has a full plate to deal with, but it sounds like
she's got the right skill set to tackle the challenges that await her at
OTPP.