La Caisse takes prominent Quebec role

The Canadian pension will be responsible for the execution of major infra projects in Québec through a yet-to-be established subsidiary.

La Caisse de dépôt et placement du Québec (La Caisse), one of Canada’s leading institutional fund managers, will be responsible for the planning, financing, development and operation of major infrastructure projects in the province following an agreement the pension fund has concluded with Quebec’s government, La Caisse said in a statement on Tuesday.

Under the terms of the agreement, which has to be approved by the National Assembly, the government will identify projects that may be of interest to La Caisse. Once La Caisse confirms interest, it will coordinate calls for tender while an independent auditor will also be appointed to ensure the tendering process is fair and transparent.

The government, however, will be responsible for setting broad guidelines, having the final say on whether a project moves forward and retaining control of the infrastructure asset, thus preserving its role as “guardian of the public interest,” according to the statement.

Two projects totaling C$5 billion (€3.6 billion; $4.2 billion) have already been identified as priorities. They are a public transit system to be built on Montréal’s new Champlain Bridge and a public transit system linking downtown Montréal to the Montréal-Trudeau International Airport. La Caisse aims to complete both projects by the end of 2020.

“Today’s agreement will allow us to increase our exposure to infrastructure while concretely putting our expertise to work for Québec’s economy,” La Caisse’s president and chief executive Michael Sabia said. “These investments will generate returns that help to secure Quebecers’ retirement for the future. It’s a win-win partnership that benefits everyone,” he added.

La Caisse will launch a new infrastructure subsidiary – CDPQ Infra – that will be tasked with execution of these projects. The new subsidiary is expected to become a central component of La Caisse’s business strategy the way its real estate subsidiary Ivanhoé Cambridge has become.

“Ivanhoé plans the development of real estate projects, oversees their construction and then manages the assets,” Sabia explained. “In this way, it has become one of the 10 largest real estate operators in the world.”

La Caisse hopes to replicate the new business model for infrastructure in jurisdictions outside of Canada.

The pension fund, whose net assets totaled C$214.7 billion as of June 30, 2014, has been investing in infrastructure for the past 15 years. Examples include the Canada Line, the rapid-rail service connecting Vancouver Airport with downtown Vancouver, in which La Caisse participated as lead investor in 2005. In the UK, La Caisse is a shareholder in Heathrow Express, the rail service linking Paddington Station and Heathrow Airport as well as Gatwick Express, the fast train linking central London and Gatwick Airport.

Established in 1965, La Caisse now serves 32 depositors, primarily public and private pension and insurance funds in Québec. According to its website, it is one of the largest institutional fund managers in Canada and North America and the leading private equity investor in Canada.