It’s relatively rare for an institutional investor to make a public statement about a loss on a venture capital investment, but nothing about the $32 billion explosion and bankruptcy of FTX International is normal.
Citing recent reports of potential fraud at FTX, the Ontario Teachers’ Pension Plan said the development was “deeply concerning for all parties” and that it fully endorsed the efforts of regulators and others to review the risks and causes of failure at the company fully support.
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The pension plan also said it will strengthen its investment methods for future deals after reducing its investment from $95 million to zero for a less than 1% stake in FTX.
The FTX loss is less than 0.05% of the pension plan’s total net assets and it remains in a strong financial position, according to a statement on the Ontario Teachers’ Pension Plan website.
“We are disappointed with the outcome of this investment, take any losses seriously and will use this experience to further strengthen our approach,” the Ontario Teachers’ Pension Plan said Thursday.
The Ontario Teachers’ Pension Plan currently manages $242.5 billion in assets for 333,000 current and prospective retirees.
It’s the latest major venture capitalist to make statements on FTX losses. SoftBank said it lost $100 million, and Singapore sovereign wealth fund Temasek invested between $200 million and $300 million in FTX, according to a report. Sequoia said it wrote down the $214 million it invested in FTX to zero.
The Ontario Teachers’ Pension Plan made a $75 million investment in FTX in 2021, plus a $20 million follow-on investment in January through its three-year-old Teachers’ Venture Growth (TVG) platform to “give a small entry into an emerging area in the financial technology industry.
“Of course, not all early-stage investments in this asset class perform as expected, but since inception, TVG has solidly delivered on its intended goals,” the pension plan added.
The pension fund has carried out a “robust due diligence” on all private investments and is supported by external consultants.
At FTX, the pension plan worked closely with outside consultants to review commercial, regulatory, tax, financial, technical and other matters.
“Considering that no due diligence process can uncover all risks, particularly in the context of an emerging technology company, the investment in FTX has been measured moderately relative to TVG and the plan’s overall portfolio,” the pension fund said.