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Canadian Infrastructure Investor Universe

by Iain Jones

  • 11 Oct 2011
  • INF

Preqin is currently tracking 65 Canadian institutions that are actively investing in infrastructure, putting Canada behind only the US, UK and Australia in terms of LP participation in the asset class. Private and public sector pension funds account for the largest proportion of these investors, 28% and 26% respectively, followed by endowment plans (9%) asset managers (8%) and insurance companies (8%).

Canadian LPs active in infrastructure have median assets under management of USD 5.5 billion. They currently allocate an average of 5.18% of total assets to infrastructure investment and operate an average target allocation of 9.24%. These allocation figures are at the upper end of what is typically seen in institutional portfolios, reflecting Canadian investors’ willingness to include infrastructure as a key component of their investment strategies.

When looking at Canadian investors’ route to the infrastructure market, we see the majority gain exposure through unlisted funds, 80%, while just 15% invest through listed vehicles. In addition to these indirect commitments, 51% of Canadian LPs active in infrastructure will consider making direct investments. This figure is significantly higher than is typical in other countries and reflects Canadian pension funds’ pioneering activity in this area. The inclusion of direct infrastructure exposure in an investment portfolio is becoming more widespread as institutions in other countries look to imitate the infrastructure model set out by the large Dutch, Australian and Canadian pension funds.  However, this route to market is only available to larger institutions with the resources capable of handling direct investments.

In terms of geographic location, 48% of Canadian LPs investing in infrastructure are located in Ontario, with 17% and 15% based in Quebec and Alberta respectively. This geographic split is partially reflected in the location of key Canadian LPs, determined by current allocation to infrastructure. OMERS, CPP Investment Board and Ontario Teachers’ Pension Plan, the top three infrastructure investors, are all based in Ontario, while CDP Capital - Private Equity Group and Public Sector Pension Investment Board, the next two on the list, are based in Quebec.

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