AIMCo to divest its Russian holdings, citing Ukraine invasion

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The Alberta Investment Management Corp. is divesting its Russian holdings as a result of the invasion of Ukraine.

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The pension management Crown corporation said Tuesday the decision goes beyond dollars and cents.

“As Alberta’s investment manager, this decision is both values- and value-driven,” the company said in a news release. “It reflects a change in the price of geopolitical risk and sustained impairment to the underlying value of the respective companies.”

The announcement on social media came shortly after Premier Jason Kenney said he had asked AIMCo on Friday to conduct a review of any investment ties it may have with Russia. The premier was told then it had $159 million in direct and indirect exposure to Russian securities, including about $60 million held through emerging markets quantitative strategy, representing about 0.1 per cent of AIMCo’s $168 billion in assets under management.

By Monday, those assets were feeling the weight of the collapse of the Russian market. AIMCo said that as of Feb. 28, it had less than $99 million in direct and indirect exposure to Russian securities.

Further, these holdings represent 0.16 per cent of the $48.7-billion public equities portfolio and represent AIMCo-nominee holdings that are externally managed.

“AIMCo’s public equities team was successful in divesting some of our holdings in Russian securities in difficult markets, however, full divestment will take longer given current constraints regarding the trading of Russian securities imposed by regulatory authorities,” AIMCo spokesperson Dénes Nemeth said in an email.

Kenney said the federal government needs to freeze questionable Russian assets connected to the Putin regime.

“The government of Alberta does not have the power to do so but we’d be happy to co-operate with the federal government as necessary on that,” he said.

Deputy Prime Minister Chrystia Freeland announced more sanctions on the Russian economy are expected in the coming days. She said the sanctions will target individuals and institutions that enable Putin, including Russian oligarchs and companies in Canada. She did not specify any companies by name.

“We have to be honest with ourselves, I have to be honest with Canadians, that there could be some collateral damage in Canada,” she said, but added the pain will be worse for European countries who are more interwoven economically with Russia, especially oil and gas.

Duane Bratt, a political science professor at Mount Royal University, said the province had little option but to take this step but it is largely symbolic and falls in the same line as the province pulling Russian liquor off of the shelves.

In particular, Kenney has tried to leverage the situation to position Alberta as a socially responsible alternative to Russia for oil and gas, specifically in exporting to the U.S.

“If you’re going to bash Putin over and over again, it doesn’t look very good if you’ve got your investment arm with investments in Russia,” he said.

He said the most impactful sanctions against Russia have targeted SWIFT, the central banks and oligarchs, and they have already been effective. There is more that can be done, he added, including going after their real estate holdings around the world. He said some of the oligarchs are already starting to come out against the war.

Bratt said the intention is to have Putin’s allies pressure him to withdraw from Ukraine, but is not sure how successful the tactic will be.

“Quite frankly, I can’t see Putin reversing course. I think the option is basically regime change in Russia,” he said. “But he’s not going to backtrack, he’s going to escalate.”

jaldrich@postmedia.com

Twitter: @JoshAldrich03