CDPQ invests in Sydney Metro as Palisade, Partners Group exit

The change in ownership comes as the PPP consortium reached contractual close with the NSW state government on an extension of the project.

Canadian pension Caisse de dépôt et placement du Québec has acquired a 24.9 percent stake in the Sydney Metro Northwest Operations, Trains and Systems PPP, following the exit of Palisade Investment Partners and Partners Group for a total transaction value of A$167 million ($113 million; €103 million).

In a statement, Palisade said it had divested its entire equity stake of 20 percent to CDPQ and the “remaining shareholders” of the Northwest Rapid Transit consortium, but did not provide further details. The firm was also unable to comment on the value of the sale or the reasons for its divestment, although executive director Vicki Rigg said the PPP had delivered an “outstanding return” for investors.

Palisade invested in and managed its stake on behalf of its Australian Social Infrastructure Fund and a direct investment mandate client, according to a statement the fund manager issued at the time of its investment in 2014.

A spokeswoman for Partners Group confirmed to Infrastructure Investor that the Swiss investment firm had fully exited Sydney Metro as well, selling its stake to CDPQ and Plenary Group, an existing member of the NRT consortium, but declined to comment further.

The new-look Northwest Rapid Transit consortium this week also reached financial close on the next stage of the Sydney Metro project, an extension into the city centre and the city’s southwest.

The consortium now comprises five investors: Hong Kong’s MTR Corporation (27.55 percent of equity), CDPQ (24.9 percent), Marubeni Corporation (20 percent), Plenary Group (17.55 percent) and Pacific Partnerships (10 percent).

MTR and Plenary Group both increased their stakes by 7.55 percent each as a result of Palisade and Partners Group’s exits.

Plenary Group acted as principal commercial advisor and financial arranger for the PPP extension. It said in a statement that debt financing has been provided by several domestic and international banks including ANZ, Crédit Agricole CIB, HSBC, ING, Intesa Sanpaolo, KfW, Mizuho, MUFG, NAB, OCBC, SMBC, UOB and Westpac.

CDPQ executive vice-president and head of infrastructure Emmanuel Jaclot said in a statement that its investment in the NRT consortium was “perfectly aligned with our strategy to invest in high-quality infrastructure assets, alongside partners with a deep understanding of the market and vast operational expertise”.

Sydney Metro Northwest opened in May 2019 and is the first stage of the wider Sydney Metro project. The Northwest section saw the construction of eight new stations on a new 23-kilometre rail link from Rouse Hill to Epping in the north of Sydney, plus upgrades of an existing 13-kilometre line between Epping and Chatswood on the northern edge of the city centre. The line covers 13 stations in total and is Australia’s first, fully-automated, driverless metro system.

NRT’s PPP contract was first awarded in 2014 and the extension deal into the City and Southwest section will see it oversee operations and maintenance of the line for 10 years from the project’s completion in 2024.

The extension will see the consortium provide 23 new metro trains and the core rail systems for the line, which will run through 15.5-kilometre twin tunnels under Sydney’s city centre and along 13.5 kilometres of upgraded lines to the city’s south-west, providing for an integrated operation along the entire line. Separate contracts for tunnelling and station developments have already been awarded.

The Northwest section was delivered under three public-private partnership contracts, with the Operations, Trains and Systems contract the largest of the three at A$3.7 billion. CPB John Holland Dragados delivered the A$.1.15 billion contract to deliver 15-kilometre twin tunnels between Bella Vista and Epping, Australia’s longest railway tunnels, while an Impregilo-Salini joint venture delivered the A$390 million Surface and Viaduct Civil Works PPP.

Further sections of the project have been proposed for Sydney’s west, connecting Parramatta with the city centre, and a new rail link to connect Rouse Hill with the under-construction Western Sydney Airport.

This story was amended on December 4, 2019, with an update on the make-up of the NRT consortium after it reached financial close on its PPP extension.