Ontario Teachers’ Pension Plan is latest FTX investor to mark venture investment to zero

It’s relatively rare for an institutional investor to make a public statement about a loss on a venture-capital investment, but nothing about FTX International’s $32 billion blow-up and bankruptcy is normal.

Citing recent reports about potential fraud at FTX, Ontario Teachers’ Pension Plan said the development “is deeply concerning for all parties” and that it fully supports efforts by regulators and others to review the risks and causes of failure at the company.

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The pension plan also said it will fortify its investment methods for future deals after it marked down to zero its $95 million investment for a less than 1% stake in FTX.

The FTX loss amounts to less than 0.05% of the pension plan’s total net assets and it remains in a financially strong position, according to a statement on the Ontario Teachers’ Pension Plan website.

“We are disappointed with the outcome of this investment, take all losses seriously and will use this experience to further strengthen our approach,” Ontario Teachers’ Pension Plan said Thursday.

Ontario Teachers’ Pension Plan currently manages $242.5 billion in assets for 333,000 current and future retirees.

It is the latest big venture-capital investor to issue statements on FTX losses. SoftBank said it lost $100 million and Singapore sovereign wealth fund Temasek invested between $200 million and $300 million into FTX, according to a report. Sequoia said it wrote down the $214 million it invested in FTX to zero.

Ontario Teachers’ Pension Plan invested $75 million in FTX in 2021, plus a $20 million follow-on investment in January, through its three-year-old Teachers’ Venture Growth (TVG) platform in order to “gain small-scale exposure to an emerging area in the financial technology sector.

“Naturally, not all of the investments in this early-stage asset class perform to expectations, however, since inception, TVG has delivered solidly on intended objectives,” the pension plan added.

The pension fund conducted “robust due diligence” on all private investments and is supported by external consultants.

With FTX, the pension plan worked closely with third-party advisers to explore commercial, regulatory, tax, financial, technical and other matters.  

“Recognizing that no due diligence process can uncover all risks especially in the context of an emerging technology business, the investment in FTX was sized moderately in relation to TVG and the overall portfolio of the plan,” the pension fund said.

Source: https://www.marketwatch.com/story/ontario-teachers-pension-plan-is-latest-ftx-investor-to-mark-venture-investment-to-zero-11668792493?siteid=yhoof2&yptr=yahoo