CANADA - Ontario Municipal Employees Retirement System (OMERS) has increased its stake in a rail infrastructure project in Detroit, to become the majority owner.
Borealis Infrastructure Management Inc, OMERS' infrastructure investment branch, bought 33.5% of Canadian Pacific Railway's stake in the Detroit River Tunnel Partnership for C$110m (€65.8m), upping its ownership to 83.5%.
"The Detroit River Tunnel is an investment that fits into our long-term strategy of securing infrastructure assets that can generate stable and sustainable returns for OMERS plan members," said Michael Nobrega, chief executive officer (CEO) and president of OMERS.
Borealis Infrastructure purchased its initial 50% share in the Detroit River Tunnel in 2001.
The Tunnel is used for carrying Canada Pacific's rail line from Windsor to Detroit across the Canada-US border and is considered an important link in the US transport infrastructure.
Canada Pacific Railway's interest is now reduced to 16.5%, although the firm retains its exclusive right to operate and maintain the Tunnel. Canada Pacific will also gain C$22m of additional proceeds based on future freight volume through the tunnel.
OMERS currently allocates 20% of its C$43bn in net assets to infrastructure and 12.5% to real estate. The pension's infrastructure returns remained relatively robust during 2008, falling from 12.7% in 2007 to 11.5%.
In February 2009, the pension fund stepped up its infrastructure exposure by purchasing Guard Resources Ltd, an asset management business in the energy sector. OMERS plans to invest up to C$600m in the oil and gas sectors in Western Canada.
OMERS provides benefits to over 390,000 members, making it one of the largest Canadian pension plans.