CANADA - The Ontario Teachers' Pension Plan (OTPP) last week made its first infrastructure investment in Latin America with the acquisition of stakes in two Chilean water companies.
Although the fund did not disclose the value of the transaction, it cited Chile’s stable political environment and a regionally relatively mature regulatory framework as reasons for the acquisition.
"We’re looking for more of the same," said pension communications manager Debra Hanna. "We’re interested in Chile in particular and Latin America in general."
This latest acquisition is part of a plan to increase the fund’s global investment in infrastructure – notably water sector, port facilities and toll roads – from the CA$6.8bn (€4.6bn) posted at the end of 2006. "We’re looking all over the world – and definitely in Latin America," said Hanna.
The pension fund – which features among the world’s largest infrastructure investors –also announced last week it had co-acquired just under 50% of the UK’s Birmingham Airport via its subsidiary, Airport Group Investments. The acquisition, with Australian fund manager Victoria Funds Management Corporation (VFMC), cost £420m (€615m).
Hanna said OTPP and VFMC had "many shared interests".
"It [VFMC] is a long-term investor, used to dealing with public sector stakeholders and working with districts [local authorities]," she said. "We’re looking forward to it."
The attractiveness of infrastructure for OTPP and other pension funds lies in the fact that it is relatively inflation-proof. "It needs to withstand the pension plan. We have young teachers who will still be collecting in 70 years’ time," said Hanna.
Airports, in particular, have high barriers to entry and a long economic shelf-life and are also seen as relatively resistant to economic shocks.
"Birmingham has the potential to be the most attractive regional hub in the UK," said Hanna. "It’s in a good location, with strong surface transport links."