AIMCo boss says fund is looking at technology investments in 2013

CALGARY – Alberta Investment Management Corp. is seeking opportunities to invest in technology this year, the CEO of the provincial fund manager said Thursday.

When Leo de Bever took the helm of the $70-billion fund in 2008, he made food, energy and materials the focus of AIMCo’s investments.

In 2013, he’s adding a fourth priority — “enabling technology.”

“We’re always looking for technologies that enhance what we’re doing elsewhere,” de Bever told reporters.

For instance, de Bever is planning to visit KiOR Inc., a biomass plant in Columbus, Miss., that turns sawdust into oil, which can then be processed into fuels such as gasoline.

AIMCo has invested in forestry land in Australia, so the KiOr project would not be too far outside of its area of expertise, de Bever said.

De Bever said technology could hold the answer to helping oilsands companies cope with the steep discount they’re getting for their product versus other varieties.

That could mean exploring ways to use less energy in the upgrading process or transporting it in a solid form to cut transportation costs.

“When oil was at $92 and you could ship bitumen to the south and make decent margin, technology wasn’t up the most on people’s minds. I think now they’ll be forced to pay a lot more attention to it,” he said.

De Bever concedes that betting on new technology “doesn’t always work.”

For example, AIMCo looked at a company that had found a way to “demobilize” carbon dioxide, that could help coal-fired plants cut their emissions and expand their lifespans. Ultimately, the fund decided it was too pricey an investment and took a pass.

“You have to try things and it doesn’t always come out right,” particularly in emerging technologies, said de Bever.

“Out of 10 opportunities, two or three are going to make you all the money and break even in four or five and lose your shirt in two or three. That’s just the nature of what we do.”

And betting on a technology simply because it’s superior isn’t necessarily the way to go either.

“It’s sort of like VHS and Betamax,” he said. Betamax was the better technology, but VHS was dominant because people were faster to adopt it.

De Bever also said it’s worth exploring whether it makes more sense to leave some oilsands crude in the ground and wait until new technologies come around to add value to it rather than produce it as quickly as possible.

“Who says that shipping it to Louisiana or Oklahoma is the most valuable way in the long run of making use of this resource?” de Bever said.

“We ought to be open to this whole question of we’ve got the resource, now what’s the optimal way to exploit it?”

A recent Wall Street Journal piece by Northwestern University’s Robert Gordon argued that it was unlikely that technical innovations would lead to the sort of transformative leaps in living standards that there have been in the past.

De Bever said he doesn’t subscribe to that pessimistic school of thought.

“There is so much technology waiting to be deployed that it’s going to make an enormous difference. The only question in my mind is who’s going to get the benefit of that technology,” he said.

De Bever described 2012 as a “confusing” year and said 2013 will probably be much the same.

“Political decisions … are driving the emotions of the market and ultimately volatility of markets is driven by emotions more than reality,” he said, pointing to the U.S. fiscal cliff debate and eurozone tensions as examples.

De Bever sees a “dicey” outlook for bonds and says stocks should do better.

He said AIMCo made a 10 per cent return in 2012 and that a roughly six per cent return is likely in 2013.

AIMCo invests globally on behalf of 26 pension, endowment and government funds in Alberta, including the Alberta Heritage Savings Trust Fund.