OMERS claims stake in Som Seif’s Purpose Investments

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OMERS Platform Investments, a branch of one of Canada's largest pension fund providers, is taking a minority stake in exchange-traded funds provider Purpose Investments.

The deal will see OMERS provide Purpose the capital needed to gain market share in the ETF industry, said Som Seif, president and CEO of Purpose Investments.

"We have seen tremendous growth in our business since our inception four years ago, and this new relationship with OMERS will provide us with the capital we need to advance our business faster and further," Mr. Seif said.

Terms of the deal are not being disclosed. But Mr. Seif says the ambition is for OMERS to grow its stake in Purpose over time, although only as a minority shareholder.

OMERS Platform Investments is the innovation arm of Ontario Municipal Employees Retirement System, which has more than $85-billion in net assets under management.

Purpose Investments is the last major independent ETF shop in Canada with $3.3-billion in assets under management across 33 ETFs and mutual funds, as of April 30.

Mr. Seif is widely known among the financial community as Canada's ETF pioneer after introducing some of Canada's first ETFs to the marketplace with the launch of Claymore Investments in 2005. That company quickly took off, reaching $8-billion in assets under management in less than six years.

But just when he hit his stride, Mr. Seif's U.S. financial backer, Guggenheim Partners, decided to sell the company to competitor BlackRock Inc.

In 2012, Mr. Seif re-entered the ETF space with the launch of Purpose Investments, but was hesitant to take on any financial partners despite being approached by many industry players – until now.

"I was very loath to the idea of bringing on a partner where I would have to deal with a situation where someone would want to buy us or take out control," Mr. Seif said in an interview Thursday.

"The unique thing about this partnership is that it is with someone who doesn't have the ambition to buy me, and wants to offer more than just capital. They are going to come in with a really strong support model to help us build and grow our business, as well as help us grow our vision on how we want to build it over the next five to 10 years," he said.

The discussion of a partnership occurred over the past two years, said Mr. Seif, who is a long-time friend of John Ruffolo, the chief executive officer of OMERS Ventures and executive managing director of OMERS Platform Investments.

Mr. Seif and Mr. Ruffolo have both been involved in charitable works for the Art Gallery of Ontario.

In addition to its venture capital platform, OMERs Platform Investments also manages platforms in special situations and energy, and has recently launched a financial services (FS) platform.

Purpose is the first investment initiative to be added to the FS platform.

"After a year-long process of developing the strategy for the FS Platform of OPI, we're very pleased with this investment in Purpose and to partner with such a strong asset manager and great entrepreneur in Som Seif," said John MacKinlay, special adviser with OMERS Platform Investments.

"This investment gives us exposure to an industry which is in the midst of major transformation and represents exciting opportunities for growth in sectors that will experience real change through emerging technologies and changing consumer behaviours."

Any subsequent investments in the financial services space will be done through Purpose directly, Mr. MacKinlay said.

"The FS Platform is a newly created mandate where we will make investments through our foundational partner, Purpose Inc. to capitalize on disruptive change within the financial services sector," he added.

OMERS is also looking at investment opportunities in the areas of clean tech, agriculture and life sciences.