Alta. fund didn’t sow Viterra deal but reaps reward

The head of Alberta’s public pension fund manager is pleased by the rich return it stands to make on its 17 per cent stake in Viterra as a result of Glencore’s proposed $6.1 billion takeover of the Canadian grain handler.

That said, Alberta Investment Management Corp., known as AimCo, did not use its influence as Viterra’s largest shareholder to trigger the deal, CEO Leo de Bever said in an interview.

Initially, AimCo sought to build Viterra into a major global food concern, with its main platform in the Prairie agriculture sector, he said.

"As much as we would have liked to execute on our plan, this came along, a bid was made, we had to do what was best for our clients and that’s what she wrote," de Bever said. "We didn’t trigger this, it wasn’t our first objective, but when it started to happen we had to deal with the facts as we found them."

Last November, Aimco, which manages $71 billion in Alberta public sector pensions and government funds, urged Viterra to rejig its board of directors, and chided the company for issuing "platitudes" about seeking shareholder input.

It said the board lacked the required skills for an international food business. Viterra later appointed AimCo executive Brian Gibson to the board.

On Tuesday, de Bever declined to say if the initial criticism and the takeover deal were directly connected.

"There’s a global consolidation in agricultural companies, and a global interest in agricultural assets. So you have to look at it against that backdrop, I think," he said.

Glencore, the world’s No. 1 diversified commodities trader, said Tuesday it would buy Viterra, Canada’s largest grain handler, in a deal will shake up an industry that should flourish as world demand for food surges.

AimCo would nearly double its investment through the deal, de Bever said. It first took a position in Viterra in 2009, when it injected $220 million to help the grain handling firm buy an Australian rival.

The problem now, he said, is where to reinvest the money as it still seeks opportunities in Canada’s agriculture sector. Food, energy and materials have long been AimCo’s main investment targets.

"That’s going to be interesting. Obviously, we first have to put this one to bed, but we still feel that western Canadian agriculture has not realized its full potential, and it’s got enormous potential in the next 10 to 20 years," he said. "We’d like to be part of that."

The organization is already looking for such opportunities, though there is none currently on the radar the size of Viterra. In addition, it will not act hastily. He described a "silly season" of land prices in Canada and elsewhere.

Meanwhile, the structure of the Viterra transaction, bringing in two other Canadian companies as Glencore divests parts of the business, should prevent regulatory snags over foreign investment or competition concerns, de Bever said.

"Either in an Australian or Canadian point of view, my guess is this will be deemed to be a good outcome."


Stories from our other publications