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Canada-Based Investors Active in the Infrastructure Asset Class – April 2014

by Julia Goodall

  • 08 Apr 2014
  • INF

Canada-based investors, most notably Canadian pension funds, are particularly prominent in the infrastructure asset class, and over recent years have been involved in a number of large transactions. CPP Investment board, for example, have been involved in three infrastructure transactions already this year; acquiring in February a 10.43% stake in the Camisea Gas Project, a natural resources pipeline in Peru for a total deal size of $217mn. In March the pension fund then increased its stake by a further 23.6% for $607mn, resulting in a total 34.03% stake in the project. Also in February, CPP Investment board invested INR 10bn ($166mn) in L&T Infrastructure Development Projects, a major player in PPP projects in India across a variety of economic infrastructure sectors. These transactions are an indication of the growing trend among direct infrastructure investors of targeting new regions in which to grow their investment portfolios as competition, and consequently price, for assets in developed countries increases. Preqin has looked at data from Canadian investors as a whole, to identify trends among investors and compare them to the wider infrastructure universe.

Preqin’s Infrastructure Online is currently tracking 115 Canada-based investors that are active in the infrastructure space. These investors have aggregate assets under management of $3.4tn, and an average current allocation to infrastructure of 5.5%, or $1bn. This is almost double the $508mn average current allocation for infrastructure investors globally. The average target infrastructure allocation of Canadian investors is 9.6%, indicating that there is considerable capital available for further investment in the space. A substantial 46% of Canadian infrastructure investors have target allocations for the asset class of 10% or more, and a further 34% have target allocations between 5% and 10%, signifying positive attitudes towards infrastructure investments. Sixty-three percent of Canada-based infrastructure investors allocate capital to the asset class via a separate infrastructure allocation, which compares to 40% of infrastructure investors globally, and is another sign of the prominence of Canadian investors in the asset class.

The largest Canada-based infrastructure investor is the public pension fund OMERS, which has $13.2bn allocated to the asset class via its infrastructure specific arm, Borealis Infrastructure, which amounts to 24% of its total assets. In January 2014, OMERS acquired a 31.6% stake in Bruce Power, a Canadian nuclear power generation company for CAD 450mn, adding to its existing 31.6% stake acquired in February 2003 and resulting in a total 63.2% interest. In February 2014, OMERS was known to be involved in the bidding process for the sale of Queensland Motorways in Australia, alongside IFM Investors and Ontario Teachers’ Pension Plan.

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