Two of Canada’s largest pensions institutions are joining forces with a local firm to invest in Mexican infrastructure
Canada Pension Plan Investment Board (CPPIB) and Ontario Teachers’ Pension Plan (OTPP) are providing CAD1.35bn (€934m) of equity for part-ownership one of the country’s largest federal toll road concessions.
They have formed a “strategic partnership” with large, independent infrastructure firm Impulsora del Desarrollo y el Empleo en América Latina (IDEAL), to invest in infrastructure assets in Mexico.
IDEAL will own 51% of the joint venture — called Newco — while CPPIB will own 29% and Ontario Teachers will have 20%.
Under the terms of the agreement, IDEAL will contribute its 99% equity interest in the company holding the concession of the Arco Norte toll road to Newco.
The deal comes more than six months after CPPIB and OTPP invested together in a US toll road, buying the company that operates the Chicago Skyway.
Cressida Hogg, managing director and head of infrastructure at CPPIB, said: “Arco Norte represents our first infrastructure investment in Mexico and enables us to invest in an established, modern toll road of significant size alongside IDEAL and Ontario Teachers’.”
The investment is in line with its strategy to invest in core infrastructure assets with long-term, stable cash flows in key global markets, she said.
Andrew Claerhout, senior vice-president, infrastructure and natural resources at OTPP, said Arco Norte was an attractive asset with long-term growth potential that would provide income to pay pensions.
“This investment provides a strong foundation for continued growth of our infrastructure portfolio in Mexico and the rest of Latin America,” he said.
Arco Norte is one of the biggest federal toll road concessions in Mexico and with more than 30 years left.
The 223km road is a bypass surrounding Mexico City in the north, northeast, and northwest region of the country.
It links the states of Mexico, Puebla, Hidalgo and Queretaro, and is a critical link with major trade corridors.
Macquarie Capital advised CPPIB and OTPP, and Credit Suisse Securities advised IDEAL.