January 13, 2015 / 3:33 PM / 4 years ago

Pension fund to take over Quebec infrastructure projects

MONTREAL (Reuters) - Canada’s second-largest pension fund said on Tuesday it will finance, develop and operate major infrastructure projects for the cash-strapped province of Quebec under a deal the fund hopes will create other such opportunities internationally.

The Caisse de depot et placement du Quebec (CDP) building is seen in Montreal, February 26, 2014. REUTERS/Christinne Muschi

The Caisse de depot et placement du Quebec, which manages the province’s public pension plans and holds C$215 billion ($180.04 billion) in net assets, said the first two public transit projects identified through the deal will be worth about C$5 billion.

The target completion date for the projects, a light rail line on Montreal’s new Champlain Bridge and a rail link between downtown Montreal and the city’s international airport, is late 2020.

The agreement, which must be ratified by the French-speaking province’s National Assembly, creates a new Caisse subsidiary, CDPQ Infra. The unit would target projects in Quebec along with markets such as the United States, where some groups say $3.6 trillion must be pumped into crumbling public infrastructure by 2020.

“We intend to go further. We intend to export this model,” Caisse Chief Executive Michael Sabia told a Montreal news conference. “This model will help (other governments) to meet their needs. And in so doing, this will open new markets.”

The Caisse and other Canadian investors are also eyeing aging U.S. airports such as New York City’s LaGuardia, where a $3.6 billion call for tenders to redevelop the central terminal has attracted bidders including British Columbia-based Vantage Airport Group.

Sabia said he and Quebec Premier Philippe Couillard raised the idea of the Caisse pursuing projects in its home province last summer, even as it and other big Canadian pension funds scour the world for long-life, revenue-generating infrastructure assets.

According to data from London-based research firm Preqin, three of the 10 largest infrastructure investors worldwide are from Canada.

The Caisse holds almost $10 billion in global infrastructure assets, and is a shareholder in the UK’s Heathrow Express, the rail service linking Paddington Station and Heathrow Airport.

Sabia insisted that transit projects developed by the Caisse would generate return “in line with market standards,” and that CDPQ Infra will not be controlled by the Quebec government.

“There is no question here about compromising independence,” he said. “There is no question of the government imposing things, there is no question of the Caisse becoming the financial arm of the government.”

Editing by Jeffrey Hodgson, Meredith Mazzilli and Peter Galloway

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