(MENAFN- Live Mint) (Bloomberg) -- Alberta named a long-serving bureaucrat as interim chief of its public pension fund manager following the shock firing of the entire board and the CEO, as the provincial government tries to slash investment costs and dramatically increase the size of its sovereign wealth fund.
Ray Gilmour, who joined the public service in 2007 and is currently deputy Minister of the executive council, will work to“stabilize operations and ensure smooth operations” at Alberta Investment Management Corp. while a permanent CEO is chosen, the government said in a statement Friday. Finance Minister Nate Horner is temporarily acting as Aimco's chairman and sole director.
Alberta Premier Danielle Smith's government is seeking major changes at Aimco after the firm's headcount and costs swelled without a corresponding improvement in returns. The government cited rising headcount and salary costs even as Aimco managed a smaller portion of funds in-house.
Aimco managed about C$169 billion ($121 billion) of public pension and other government money as of June 30. The firm has more than 200 investment professionals, and 600 employees in total, working in offices in Edmonton, Calgary, Toronto, London, Luxembourg, Singapore and New York, according to publicly available information.
“This is truly shocking,” said Keith Ambachtsheer, president of KPA Advisory, which advises pensions plan.“The people of Alberta should be very worried about the implications of this totally unwarranted C$161 billion heist of its endowment and pension assets.”
The main goal of the overhaul is to reduce Aimco's operating costs, and the new management team will have latitude on how to accomplish that, according to a person familiar with the matter, who asked not to be named because the information isn't public.
The government also is seeking to restore trust in the money manager as it embarks on a plan to massively increase the size of Alberta's Heritage Savings Trust Fund -
which invests the province's oil and gas wealth for future generations - to C$250 billion to C$400 billion by 2050, said the person.
Details of the province's plans for the Heritage Fund, which currently has about C$23.4 billion in assets, may be released in the coming weeks, the person said.
“Aimco did have a bad performance spell in 2020, getting caught on the wrong side of some derivatives transactions,” Ambachtsheer said.“Since then, it has gone through a major transformation at both the board and executive levels.”
John O'Connell, CEO of Canadian money manager Davis Rea Ltd., took a different view.“It's a problem with all these pension funds. They all got carried away with fancy strategies which require expensive people and leverage,” he said.
“After years of gorging on opaque strategies and now living with a regime change of higher interest rates they are beginning to face the reality that there is no free lunch,” he said, adding that the funds are“racking up costs and suboptimal returns.”
Aimco said in a statement that it welcomes Gilmour's appointment and remains committed to investing on behalf of its clients.
--With assistance from Layan Odeh.
(Updates with government plans starting in fourth paragraph)
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