CANADA/NETHERLANDS - Dutch pension fund PGGM and the Canadian Public Sector Pension Investment Board (PSP) are major shareholders in a recently-formed infrastructure vehicle which has acquired Natural Gas Pipeline Company of America (NGPL) for $6.5bn (€4.5bn).

Myria Acquisition, a consortium headed by Babcock & Brown, acquired 80% of the NGPL operating subsidiary MidCon from parent company Knight, which will continue to manage the firm.

But this is an investment with returns for PGGM and the CA$35bn (€23.8bn) PSP fund as they own, respectively, almost 10% and 20% of Myria.

Moody's last week identified NGPL as low business risk in its credit rating upgrade of NGPL, citing scale, supply growth potential and the fact that, as a regulated operator, it generates the bulk of its revenues from volume-independent reservation charges. That said, Moody's tempered its enthusiasm with a Baa3 rating based on the new owners' absence of operating experience.

This comes after ratings agency Standard & Poor last month suggested oil and gas would dominate the infrastructure market in 2008, skewing investment towards power-dominated markets such as Russia. The Russian infrastructure market saw an increase in activity from $3.9bn in 2006 to $56bn in the year to date.

However, David Uitdenbogaard, a spokesman for PGGM, indicated the fund would not restrict its infrastructure investment to specific sectors.

"Generally speaking, PGGM is interested in infrastructure investments provided the projects deliver long-term, stable cashflows and yield an acceptable risk-adjusted return," he said.

"The stable cashflows will have to be underpinned by either regulation or long-term contracts with creditworthy counterparties. Although there is increasing competition and pressure on returns, we still see enough attractive opportunities both in the utilities markets, transport and social infrastructure - especially because we have a global outlook."

The €215bn Dutch scheme has a four-person desk dedicated to global infrastructure investment.  Its investments to date have largely been indirect, although the fund has begun to beef up infrastructure due diligence teams with a view to direct investment.

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