1. Presentation to Toronto Chapter Financial Executive International Canada Jim Leech Senior Vice President, Private Capital October 19, 2004 Your First Call

2. Overview

Teachers Private Capital

• Our business

• Representative transactions

Overview of Private Capital market in Canada

• Private Equity

• Mezzanine

• Venture Capital

What you should know when dealing with Private Capital providers

Questions from you

3.

• Teachers in Ontario have had pensions since 1917

• • Run by government ministry

• OTPP created in 1990 by transferring $17 Billion

• • Sponsors:

• • Government of Ontario and Ontario Teachers Federation

• • Independent Board of Directors

• Responsible for retirement income of:

• • 154,000 teachers

• • 93,000 retirees/families

• • 91,000 former teachers

• Assets of $79 Billion (June 30, 2004)

• • Equities 49% including Teachers' Private Capital

• • Fixed Income 21%

• • Inflation Sensitive 30% including real estate

Ontario Teachers Pension Plan Board 4. Teachers' Private Capital Portfolio Total - $4.4 Billion (plus $1.77 Billion unfunded commitments) June 30, 2004 $1.50 B $0.28 B $0.52 B $0.67 B $0.61 B $0.71 B $0.15 B $0.003 B 5. Types of Transactions

Private Equity

• Primarily Buyouts or Expansion Capital

• • • LBO/MBO/MBIs: non-core divisions of large companies

• • • Growth capital for private companies, including acquisitions

• • • Add-on acquisitions for existing portfolio companies

• Private Investment in Public Equities (PIPEs)

• • • Strategic block investments

• Going Private Transactions

• • • Undervalued public companies

• Balance Sheet Recapitalization

• • • Good business; Bad balance sheet

Venture Capital

• • • Early stage companies

6. Components of our Business

Private Equity(Direct, Funds & Co-Investments)

• Equity

• • Mid-cap and larger investments - $40M to $500M

• • Exercise control with like minded investors

• • Target returns:20-30%

• Mezzanine

• • Flexible structuring - $40M to $100M

• • Adjunct to equity investment or structured equity

• • Target returns:15-20%

• Funds

• • Access to markets we cannot source internally

• • Private equity and mezzanine fund investments - $50M to $500M

• • Target returns: 20-30%

Venture Capital

• • Fund and co-investment strategy:Funds - $10M to $50M

• • Co-investments - $3M to $5M

• • Target returns: 30% plus

7. Private Equity What do we look for?

Partners

• • Invest with like minded partners

Management

• • Experienced, strong team

• • Financial commitment

Stable Industry

• • Real Economy industries with stable or growing cashflows

Niche

• • Industry leader with sustained competitive advantage

Governance

• • Appropriate practices

Alignment of Interests 8. Private Equity Selected Investments 9. Private EquitySelected Transactions

Shoppers Drug Mart

Maple Leaf Sports and Entertainment

Osprey Media

LBO: non-core asset of IMASCO in 2000

Invested $150M in equity as part of $2.6B buyout with KKR

Taken public in late 2001 (continue as shareholder)

Public to Private: invested in 1994 buyout of Toronto Maple Leafs / Maple Leaf Gardens

Add-on investment to purchase Toronto Raptors and Air Canada Centre in 1998

Restructured ownership (58%) in 2003

MBI: in 2001 invested $45M as part of a group led by Michael Sifton to buy Hollingers local Ontario newspapers

Funded prorata share ($27M) of add on acquisition of Canwest newspapers

Taken public in 2004 (continue as shareholder)

10. Private EquitySelected Transactions

Yellow Pages Group

Trimac Corporation

Vincor

LBO: non-core asset of BCE in 2002

Invested $320M as part of $3B buyout

Taken public in 2003 (continue as shareholder)

Public to Private: privatization of large publicly traded trucking company in 2000

Committed $60M as part of $540M transaction alongside management

MBI: management led buyout of public company division in 1993

Taken public in 1996

Exited in 2002, after 9 years invested in company

11. Private EquitySelected Transactions

Samsonite

Worldspan

Parmalat Canada

PIPE to recapitalize: acquired control with Ares and Bain

Invested US $42.9M in 2003 (subsequently increased to US $48M)

LBO: acquired non core asset of three airlines in 2003. Co-led with CVC

Invested US $137.7M as part of $1.1B buyout

Recapitalization: Structured, underwrote and syndicated new capital structure ($610M)

Retained $350M of mezzanine debt

Fixed Income retained $180M of senior debt

12. Venture Capital What we look for?

Strategy

• Fund and co-investment strategy (only invest with Fund Partners)

Fund Partners

• Fund investments range from $10M to $50M

• Targeted to telecom, information technology, biotech

Co-Investments

• Initial co-investment $3M to $5M up to $20M over life of investment

Criteria:

• Demonstrated history of above average returns over long term

• Operational and financial expertise

13. Venture Capital Selected Investments Cambrian 14. Venture Capital Selected Transactions

TimeStep

Cambrian

FastLane

HotRail

Extreme

Packet

Devices

Initial investment made in 1997 alongside Newbridge Networks

Invested $1.4 million over several rounds of financing

Company acquired by Newbridge Networks in 1999

Initial investment of $2.1 million made in 1998 alongside Celtic House

Company acquired by Nortel Networks in 1998

Initial investment made in 1998 alongside Celtic House

Invested $6.3 million over several rounds of financing

Company acquired by Quest Software in 2000

Initial investment made in 1999 alongside Woodside Fund

Invested $10.8 million over several rounds of financing

Company acquired by Conexant in 2000

Invested $0.5 million in 1999 alongside Celtic House & Kodiak Venture Partners

Company was acquired by PMC Sierra in 2000

15. Venture Capital Selected Transactions

Eyetech

Ista

Topspin

Entrisphere

Infinera

Invested $1.6 million in 2001 alongside Alta Biopharma Partners

Signed large partnership with Pfizer in 2002 and taken public in 2004 (continue to hold shares)

Invested $4.8 million in 2002 in a PIPE transaction alongside Sanderling Ventures

Sold significant portion of shares

Invested $2.7 million in 2002 alongside Accel Partners (other investors include Redpoint Ventures, Meritech Capital Partners and Advent International)

Signed reseller agreement with IBM in 2004

Invested $7.1 million in 2002 alongside Accel Partners

Other investors include Benchmark Capital and CrossPoint Venture Partners

Invested $3.5 million in 2003

Other investors include Kleiner Perkins Caufield & Byers, Benchmark Capital, Accel Partners and Sutter Hill

16. Teachers' Private CapitalUnderstanding Our Business Maximize Operating Value Exit VALUE CAPTURE(6+ months) VALUE CREATION(5+ years) Due Diligence &Negotiation Acquire IdentifyOpportunities Structure

Strategy

Management

Governance

Assure Implementation

Monitor Ownership

17. Teachers' Private Capital Summary

Large pool of capital (initial and follow on investments)

Long-term investment horizon

Independent (no secondary agenda)

Not operators, supportive of management teams

Add value at Board level

Successful track record (over 25% return since inception )

18. Canadian Private Capital Market Total Capital Under Managementby Private Capital Market Segment; 2003 Total Amount $48.6 Billion 2004Macdonald & Associates Limited.All rights reserved. 19. Private Equity in Canada Private Equity Capital Invested 2004Macdonald & Associates Limited.All rights reserved. 20. Private Equity in Canada Continued * Excludes Teachers Private Capital % Years 2.9 10.7 10.4 16.4 2004Macdonald & Associates Limited.All rights reserved. 21. Private Equity in Canada Continued Private Equity Players Caisse TD Capital Callisto TeachersEdgestone Torquest > $50 Million $25 50 Million < $25 Million Schroders CAI 13 US Firms OMERS/Borealis Kilmer Onex Scotia Capital (?) Clairvest 22. Mezzanine Financing in Canada Mezzanine Capital Invested 2004Macdonald & Associates Limited.All rights reserved.

• Mezzanine Players

• TD Capital

• McKenna Gale

• Brascan

• Edgestone

• CCFL

23. Venture Capital in Canada $2.7B 815 $5.8B 1006 $3.7B 743 $2.5B 681 $1.5B 616 $0.8B 379 2004Macdonald & Associates Limited.All rights reserved. 24. Venture Capital in Canada Continued * Excludes Teachers Private Capital Years Investment Returns forVenture Capital June 30, 2004 2004Macdonald & Associates Limited.All rights reserved. 4.3 1.8 -10.3 -1.2 % 9.5 5 3 1 25. Venture Capital in Canada Continued

Market Environment

• Contrast to US Venture Capital

• • Not as badly hit in Internet / Telecom

• • No $ overhang

• • No succession issues

• • Fewer exit opportunities

• Clusters of excellence

• • Montreal Biotech

• • Ottawa Telecom

• • Vancouver Fund cells

• No experienced practitioners

• Need to build new Canadian industry

26.

Institutions have Alternatives

• Real estate

• Hedge funds

• Commodities

• Timberland

• Infrastructure

• Private equity

Cannot build an industry on tax incented money

Poorly conceived legislation E.g. business income trusts, QLP

Private Capital in Canada 27.

Be prepared

• realistic business plan

• management team

• governance

• due diligence

Understand return objectives

Largely staffed by financial engineers

Hate surprises / sudden changes in direction

Treat them as a partner

What You Should Knowin Dealing with Private Capital 28. Questions 29. Teachers' Private Capital It all starts with a call So make us your First Call. (416) 730-5359 [email_address]