The Mexican government has approved a transaction between Empresas ICA, Mexico's largest construction and infrastructure company, and La Caisse de dépôt et placement du Québec allowing the two entities to move forward in establishing ICA Operadora de Vías Terrestres (ICA OVT), an operational platform focusing on transport projects in Mexico.
ICA and La Caisse, one of Canada's largest institutional investors, said they had completed the transaction, which results in ICA owning 51 percent and La Caisse owning the balance in ICA OVT, a platform that will focus on the operation and acquisition of highway and toll road infrastructure assets.
The initial transaction includes four concessions owned by ICA, comprising Mayab toll road, Rioverde-Ciudad Valles highway, La Piedad Bypass and Acapulco Tunnel. However, the company has now transferred its ownership interest in those concessions to the joint venture, which ICA and La Caisse will operate together. ICA will continue to be responsible for the operation and maintenance of the assets.
The MXN$3.01 billion (€173.5 million; $196.5 million) La Caisse is paying for its 49 percent equity interest in the joint venture will be used to prepay ICA's short-term corporate debt, according to a joint statement.
“This transaction enables ICA to monetise a significant portion of our investment in these mature assets, and redeploy the capital to reduce corporate debt and fund our investments in the next wave of infrastructure development that is occurring in Mexico,” said Alonso Quintana, ICA's chief executive.
The collaboration allows La Caisse to make a meaningful entry into Mexico, one of the select emerging markets on which La Caisse has said it wishes to focus.
“This partnership with Mexico's largest construction and infrastructure firm presents an opportunity to increase our exposure to a promising market at a time when major structural reforms are underway to step up infrastructure programmes and stimulate the country's economic growth,” said Macky Tall, senior vice president for private equity and infrastructure at La Caisse.
Until the partnership with ICA, the Canadian organisation's only investment in an emerging market was Budapest Airport – in which La Caisse is an investor through its 40 percent stake in private investment company AviAlliance Capital.
In an interview earlier this year, Tall told Infrastructure Investor that La Caisse is “very serious about growth markets – not just in infrastructure but overall as an organisation.”
To that end, La Caisse brought on Rashad Kaldany, previously chief operating officer of the International Finance Corporation, in August 2013 as executive vice president of emerging markets.
“As part of that initiative, we have opened an office in Singapore; we have someone in Mexico and we'll be adding people in India and eventually Brazil,” Tall said during the interview, adding that La Caisse will also be open to a more economic type of infrastructure – such as toll roads, toll bridges and mass transit, as part of its diversification strategy.
La Caisse's infrastructure portfolio, built over the past 15 years and totalling C$10 billion (€7.2 billion; $8.1 billion) – or 4 percent of the organisation's C$226 total assets under management – is heavily weighted towards energy, which comprises 40 to 50 percent of the portfolio.
Transportation projects also feature prominently in another recent partnership La Caisse announced. A public transit system to be built on Montréal's new Champlain Bridge and another one linking downtown Montréal to the Montréal-Trudeau International Airport are the two projects La Caisse and the government of Québec have initially identified as part of an agreement that would see the pension fund administrator overseeing the planning, financing, development and operation of major infrastructure projects in the province. The agreement was pending approval from the National Assembly, which was granted two weeks ago with the adoption of a new law, a spokesperson for La Caisse told Infrastructure Investor .
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.