Canada Pension Plan Investment Board, the country’s second-biggest retirement fund, agreed to spend C$1.14 billion ($1.15 billion) on Chilean toll roads to expand its infrastructure holdings in emerging markets.
Canada Pension agreed to buy a 49.99 percent stake in Grupo Costanera, Chile’s largest urban toll road operator, from Italian parent Atlantia SpA, the Toronto-based fund said today in a statement. Atlantia, Italy’s biggest toll-road operator, will retain 50.01 percent of Costanera.
Costanera owns five toll roads that span a 188-kilometer (116-mile) network, including four around Santiago, according to the statement. The Chilean transaction adds to Canada Pension’s investments in toll roads in Australia and Canada, where it owns part of the 407 Express Toll Route near Toronto.
“This really fits squarely in our definition of infrastructure,” Andre Bourbonnais, Canada Pension’s senior vice president of private investments, said today in an interview. “It’s a good hedge against inflation.”
Canada Pension has been investing in infrastructure during the past decade, buying stakes in toll roads, pipelines and utilities to diversify beyond stocks and bonds. Infrastructure represents 5.6 percent of the fund manager’s assets, valued at about C$8.6 billion as of Dec. 31, the company said.
Canada Pension was part of a group that spent C$3.18 billion in February to buy a 24 percent stake the Norwegian gas pipeline network, Gassled. Bourbonnais said Canada Pension is considering other infrastructure opportunities, including electricity transmission assets, gas facilities, utilities, ports and airports.
“We’ve seen significant activity on all those fronts since the beginning of the year and we think there’s potential for other transactions before the end of our fiscal year,” Bourbonnais said.
Canada Pension is monitoring Australia and the U.K. for other such investments, he said, and Europe is “of particular interest” to the fund manager.
“Given the financial constraints of some of the governments there, we believe there may be attractive assets coming up for sale in Europe,” Bourbonnais said.
Canada Pension, which oversees retirement funds for 18 million Canadians in every province except Quebec, may consider more deals with Atlantia, Bourbonnais said.
“They’ve been a fantastic partner throughout this process and we see potentially other transactions with them in the future,” he said.
Atlantia was advised by Goldman Sachs Group Inc. and Credit Suisse Group AG in the transaction, the company said in a separate statement.