MONTREAL—The Caisse de depot is partnering with Mexican institutional investors as the Quebec pension fund manager pursues its goal of doubling infrastructure investments by 2018.
The Caisse says it will invest $1.43 billion on infrastructure projects in Mexico after teaming with a newly created consortium that manages 62 per cent of that country’s pension fund assets.
The group plans to spend $2.8 billion over five years in what the Caisse de depot says is the first such partnership in North America between Mexican financial institutions and a large international pension fund manager.
“It is going to position both the Caisse and our partner … to benefit and invest in the unique opportunities that Mexico will provide in infrastructure in the coming years,” said Macky Tall, senior vice-president infrastructure, private equity.
The Caisse sees large investment opportunities in Mexico because the government plans to spend about $614 billion over four years on infrastructure investments, targeting mainly energy and transportation projects.
It will hold a 51 per cent stake in the unnamed investment vehicle. The Mexican investors will hold the remaining 49 per cent.
The co-investment platform will focus on energy generation, including renewable energy, transmission and distribution, as well as water, transportation and public transit projects.
As part of the Mexican transaction, the pension plan partners called CKD Infraestructura Mexico, are acquiring 49 per cent of the Caisse’s equity investment with the country’s largest construction firm that owns four toll road concessions.
Tall said the co-investment platform being created in Mexico could be used in other emerging markets in Latin America such as Colombia, India or South East Asia.
“This is certainly a model we would like to replicate in other countries,” he said in an interview.
The Caisse hopes emerging markets will eventually account for 10 to 15 per cent of its infrastructure portfolio, up from the current level of less than five per cent.
It has been a major infrastructure investor in the United States and other developed markets for 15 years, building a portfolio worth more than $11 billion. Assets include the Port of Brisbane, Heathrow Airport in London, Eurostar and Colonial Pipeline in the United States.
The Caisse is also analyzing two large infrastructure projects in Montreal with an estimated value of about $5 billion. A final recommendation on options is expected to be sent to the Quebec government within 18 months on downtown transit links to Trudeau International Airport and across the new Champlain Bridge to the south shore of Montreal.
The Caisse is Canada’s second-largest pension fund manager with $240.8 billion in net assets as of June 30. It primarily manages funds for the pension and insurance plans of the public and parapublic sector, which includes doctors and other professions paid by but not directly employed by the government.