Caisse de Depot Forges Mexican Infrastructure Partnership

  • Partners include Mexico institutional investors, pension funds
  • Aim to invest up to C$2.8 billion over next five years

The Caisse de Depot et Placement du Quebec, Canada’s second-biggest pension fund manager, announced a new partnership to invest in Mexican infrastructure at a time when global investors are running away from emerging markets.

"This pullback from a lot of investors -- I think short-term investors -- pulling out of Mexico and other places, I think just opens opportunities for us," Michael Sabia, the Caisse’s chief executive officer, said in a telephone interview from Mexico City.

The Montreal-based Caisse and a group of Mexican institutional investors said Monday they plan to invest up to C$2.8 billion ($2.1 billion) over the next five years through their new co-investment platform called CKD Infraestructura Mexico SA, the companies said in a statement.

The Caisse and its partners are looking to invest in energy assets, including gas pipelines, renewable energy projects and power transmission networks, Sabia said. It will also look at transportation assets, including airports, toll roads and ports, he added.

Other Shareholders

The Caisse plans to invest about C$1.43 billion for a 51 percent stake in the new platform. CKD IM, whose shares are listed on the Mexican Stock Exchange, will hold the remaining interest. Current shareholders in CKD IM include Mexican pension fund managers XXI Bonorte, SURA, Banamex, Pensionissste and infrastructure fund Fonadin.

While Mexico still has its challenges, it also has tremendous opportunity, Sabia said. The government of Mexico has recently implemented a four-year, 7.7-trillion peso ($462 billion) plan for infrastructure investments, targeting energy and transportation projects, among others.

"It’s not perfect," Sabia said. "We don’t have rose-colored glasses on about Mexico," he said, noting its ongoing issues with corruption and public safety.

Sound Policy

The Mexican government’s focus over the past 10 or 15 years on macro-economic and sound monetary policy, however, is making it attractive to outside investors, Sabia said. Mexico is now becoming a "manufacturing powerhouse" in addition to its traditional sectors strengths, including oil and gas exports, he said.

"All of which has led to a much more resilient economy than Mexico used to have," Sabia said. "This is a much more diversified economy than people give it credit for."

Sabia said he sees similar opportunities in places like India, where the Caisse intends to open an office early next year. The Caisse opened its Mexico City office in January, Sabia said.

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