Quebec pension fund ups stakes in infrastructure test case

Mon Sep 19, 2016 1:20am EDT
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By Matt Scuffham

TORONTO (Reuters) - Quebec's public pension fund, the Caisse, is about to take on one of its toughest investment challenges yet - helping the commuters of Montreal.

Keen to boost returns, Canada's second-biggest pension fund is financing and overseeing the construction of a new 67 kilometer (41.6 miles) public transit system in Montreal, the third largest automated transportation system in the world behind those in Dubai and Vancouver.

It will own and operate the track once it has been built.

The venture is a bold move by the Caisse - more familiar with bond prices and rental yields than ticket fares and commuter habits - and one fraught with risks.

Canada's biggest pension funds, such as the Caisse and the Canada Pension Plan Investment Board, are among the world's biggest infrastructure investors, having pioneered a strategy of directly investing in the asset class as an alternative to low-yielding government bonds and volatile equity markets. (Graphic:

Senior fund sources told Reuters other funds see the Caisse's efforts as a test case as they consider whether to finance major new infrastructure projects planned by Canada's federal government.

The Caisse aims to get the first trains running by 2020, at which point other investors and public authorities can start to assess how successful the project was.

The federal government's C$120 billion ($91 billion) infrastructure investment program is spread over a decade.   Continued...

FILE PHOTO - Polices officers watch a train pass in a subway station in Montreal, May 10, 2012. REUTERS/Olivier Jean