‘Infrastructure made Canada viable’

Canada Pension Plan Investment Board head David Denison credited the asset class for growing the pension fund system in Canada. He also advised consolidation amongst the UK pension system.

Long-term investment in infrastructure has helped position Canada, via its pension fund system, as a force to be reckoned with in global finance, according to a Canada Pension Plan Investment Board (CPPIB) official.

Outgoing board chief executive David Denison cited his CPPIB, manager to C$160 billion ($160 billion; €125 billion), as well as Caisse de depot et placement du Quebec (Caisse), the Ontario Municipal Employees Retirement System (OMERS) and the Ontario Teachers Pension Plan (OTPP), as committed to investing in infrastructure, noting each retirement fund is a multibillion dollar system.

Denison, who is retiring in June, praised infrastructure as ideal for institutional capital in a speech to the Canada-United Kingdom Chamber of Commerce on Tuesday, May 15, in London.

Referring to UK Prime Minister David Cameron and his call on the UK pension fund system to allocate to infrastructure Denison, in his address, offered CPPIB, as well as Caisse, OMERS and OTPP as a model for investing in the asset class.

The sheer asset size of each plan, he explained, provided needed “scale” for infrastructure investment, and Denison suggested that consolidation amid the small UK system might be preferable.

“Absent this scale, it is hard to envision the other necessary [criteria] for success, namely strong, professional governance,” he said. He also went on to note how CPPIB itself has a “large and sophisticated” in-house investment team capable of analysing the asset class.

Denison stressed infrastructure as an “attractive” investment.

“I would emphasise that [CPPIB] does not invest in infrastructure for its own sake,” Denison said. “We do so to earn attractive, long-term, risk adjusted returns.”

Earlier in his speech, Denison hailed the UK as similar to Canada in its political, financial and social makeup, and noted CPPIB considered the country, along with Australia and Chile a highly desirable market.

He also credited the country with having a “long history of private ownership” in energy, transportation and waste and wastewater management.

Denison in February offered a similar assessment on Australia in front of the Canadian-Australian Chamber of Commerce in Sydney, noting Canada and Australia shared a comparable population.

He described Australia as a unique infrastructure market, “rare in its embrace of private ownership”.