The Canadian Government set out $180bn long-term infrastructure plans in its 2016 and 2017 budgets, in a time when the infrastructure economy is facing an estimated gap of $150bn to $1tn. These overarching policies were created to boost the infrastructure market, and already seem to be having a positive impact: the number of Canadian infrastructure deals in 2018 so far amounts to 79% of the total number completed in 2017. Renewable energy deals are accounting for a growing proportion of deal activity, rising from 31% in 2016 to 48% in 2018 YTD. At the expense of conventional energy, investments in green infrastructure are one of the key tenets of government’s infrastructure policy.
One of the specific policies adopted by the Canadian Government was the formation of the Canadian Infrastructure Bank, set up with the aim of utilizing $35bn in federal capital to mobilize up to 5x as much investment for revenue-generating infrastructure projects over the next 10 years.
The unlisted infrastructure ecosystem in Canada includes managers based in and focused on North America. Canada itself is home to just 27 infrastructure fund managers, including Ontario-headquartered infrastructure behemoth Brookfield Asset Management. The firm has secured $25bn in investor capital in the past 10 years, and represents 86% of the total raised for unlisted vehicles by Canada-based managers over that period. In the past 10 years, a total of 33 unlisted funds that include Canada in their remit have closed, raising an aggregate $37bn.
There are currently 168 Canada-based investors active in infrastructure; combined, these investors have a total of $123bn currently invested in infrastructure. These investors have an average current allocation to infrastructure of 6.1% of total assets and an average target allocation of 9.4%, and pension funds make up almost half (46%) of this group. While the preferred method of accessing the asset class is through unlisted and listed funds (by 89% and 90% of investors respectively), 43% of Canada-based investors have indicated a preference for investing in infrastructure assets directly. This includes Toronto-based public pension fund CPP Investment Board; its portfolio of direct investments includes the acquisition of six Canadian wind and solar projects – with a total capacity of 396 MW – in Ontario from NextEra energy partners for $741mn in April 2018.