Explainer: What Is the Alberta Investment Corporation Harper Has Been Tapped to Lead?

Former Prime Minister Stephen Harper delivers the keynote address at a conference, March 22, 2023 in Ottawa. Harper has been appointed chair of the Alberta Investment Management Corporation. THE CANADIAN PRESS/Adrian Wyld

Upheaval at the Alberta Investment Management Corporation has brought the rarely discussed provincially owned investment agency into the public eye in recent weeks with firings, hirings, and appointments changing the face of the entity responsible for managing billions in public funds.

The province announced on Nov. 20 that it had appointed former Prime Minister Stephen Harper as chairman of the Crown corporation, saying it would “restore confidence and stability” in the agency.

The Alberta Investment Management Corporation, better known as AIMCo, has been investing Alberta’s money for nearly 17 years, yet it is far from a household name in Canada.

Here’s a look at what AIMCo is, what it does, and how it has changed since being founded on Jan. 1, 2008.

What is AIMCo?

Headquartered in Edmonton, AIMCo is a provincially owned investment-management corporation that, as of June 30, was managing $168.9 billion in assets.

AIMCo stands as one of the largest institutional investors globally, overseeing a diverse portfolio that includes public sector pension funds and endowments. It is also responsible for managing Alberta government funds designated for public services.

The original staff of 137 in 2008 had grown to 600 by the end of 2023, with employees spread across offices in Edmonton, Calgary, Toronto, Luxembourg, and London, England.

Why Did the Government Fire AIMCo’s Board?

Alberta’s UPC government said a significant increase in costs at the investment corporation and failure to meet required benchmark returns prompted it to fire the agency’s board of directors on Nov. 7.

From 2019 to 2023, AIMCo’s third-party management fees increased by 96 percent, the number of employees increased by 29 percent, and wage and benefit costs increased by 71 percent, the province said.

These costs all increased while AIMCo managed a smaller percentage of funds internally, the province added.

The pension fund’s manager took a $4-billion dollar loss on the $110 billion it managed in the spring of 2020. AIMCo officials at the time said the loss was a result of COVID-19-related market swings and an ensuing oil price war.

Finance Minister Nate Horner said last week’s dismissal of the board would bring a “renewed focus on the best possible returns and low operating costs.”

Horner took over as the sole director and chair for the board in the interim. It was a move the Opposition NDP criticized, saying Horner should have named a non-partisan manager to oversee operations until a new board was appointed rather than overseeing the role himself.

NDP Shadow Finance Minister Court Ellingson described the move as “reckless” saying it “called into question” the ability of AIMCo to operate without government interference.

Horner was not in charge for long, however. The province appointed Harper as chairman on Nov. 20.

The newly reconstituted board led by Harper also includes a permanent unpaid board seat for the deputy minister of treasury board and finance, the province said in a press release.

Ellingson also objected to Harper’s appointment, saying Albertans don’t want politicians managing their assets.

“This move sends a horrific message to Albertans and investors that even organizations with immense fiduciary responsibilities are not immune to political interference from the UCP,” Ellingson said.

The leaders of nine of Alberta’s largest unions have also been critical of the government, saying they too deserve seats on the AIMCo board.

“This is not your government’s money,” reads a joint union letter sent to Premier Danielle Smith on Nov. 20. “It is the retirement savings of nearly 500,000 working and retired Albertans. These are our members. And on their behalf, we demand more of a say in how their money is managed.”

Why Was Harper Appointed?

Choosing Harper to head AIMCo is a bid to “restore confidence and stability” in the agency, the province said in its press release, citing Harper’s experience as a politician and businessman.

Harper led the Conservative Party of Canada from 2004 to 2015 and was elected prime minister in 2006. He served for three terms before losing in 2015 to the current Justin Trudeau-led Liberals.

The now 65-year-old Harper is described by the UPC party as being fiscally responsible and keeping Canada on a steady course during the Great Recession that began in late 2007 and lasted through mid-2009.

Since leaving politics after his 2015 loss, Harper has been involved in a number of private business ventures, including his role as a working equity partner at Azimuth Capital Management, a private equity firm with a focus on energy investments.

Harper is taking on the AIMCo chairman role pro-bono as an “act of public service” to the province he has called home for the last 46 years, he said in a social media post.

“Over several decades, Canadian pensions have earned a global reputation thanks to professional operations, upstanding ethics, and prudent risk management,” he said. “I have accepted the role of Board Chair because I want to see AIMCo further embody these values and to positively contribute to this culture.”

How AIMCo Works

AIMCo had $160.6 billion in assets under management as of Dec. 31 of last year, according to the 2023 annual report.

“Over the last decade, AIMCo has earned $62.2 billion in net investment returns for its pension, endowment, insurance, and government fund clients,” the board said in its year-end report.

The majority of the money it manages—$118.4 billion as of last year—comes from the province’s public sector pension plans, representing hundreds of thousands of Albertans.

The agency also oversees $27.3 billion in investments for several endowment funds, including the Alberta Heritage Savings Trust Fund and is responsible for managing $425 million in key government assets. Much of the money it manages for the province is used to fund infrastructure, social programs, and education.

AIMCo also manages the investments for several insurance-related funds on behalf of provincial arms-length organizations including the Workers’ Compensation Board. These funds amount to $12.9 billion of AIMCo’s assets and are invested “with an emphasis on stability and preservation of capital,” the report said.

AIMCo also manages $1.6 billion in assets for select specialty funds, including some provincial arms-length organizations.

The corporation makes its investments in three categories: public equities, fixed income, and private markets, which includes real estate, infrastructure, private equity, and renewable sources.

AIMCo’s website says its ultimate goal is “to be a destination organization, attracting individuals with widely varying work experience from across North America and around the globe.”

The corporation currently represents “a majority of the world’s cultures” with more than 40 languages spoken by those it employs.

The Canadian Press contributed to this report.