Caisse Seeks to Build C$5.5 Billion Montreal Rail Network

  • Pension manager to invest C$3 billion in 67-kilometer line
  • Project depends on contributions from Quebec and Canada

Caisse de Depot et Placement du Quebec, Canada’s second-largest public pension-fund manager, plans to seek permission to build an automated light-rail network in the Montreal area that would require investments of about C$5.5 billion ($4.3 billion).

Reseau Electrique Metropolitain, as the 67-kilometer (42-mile) rail line will be called, would link downtown Montreal with western, northern and southern suburbs and the city’s Trudeau International Airport, according to a statement released Friday. It would represent the biggest mass-transit project in Quebec since Montreal’s subway system opened in 1966.

The decision to proceed will depend on the financial participation of the governments of Quebec and Canada, the Caisse said. The fund manager is willing to contribute C$3 billion, leaving C$2.5 billion for governmental contribution.

“We believe there is a commercial return available here that will be of interest to our depositors,” Caisse Chief Executive Officer Michael Sabia said Friday at a press conference in Montreal. The fund manager probably will finance its share of the investment with a mixture of debt and equity, he said, adding that it’s too early to provide specifics on expected returns or the eventual capital structure.

“We are taking the traffic risk here,” Sabia said. “This is unusual because generally, it’s governments that take that risk.”

Couillard’s Priorities

The proposed network would merge and expand two lines that Quebec Premier Philippe Couillard had identified as priorities when he appointed the Caisse last year to plan, finance and manage new infrastructure projects in the province. The fund manager had initially expected the rail project to cost C$5 billion.

Construction will probably begin in the spring of next year, with service beginning at the end of 2020. Discussions with affected groups and citizens will be held over the next few weeks, with environmental hearings to follow.

Once completed, the 24-station rail network would be the third-largest automated transportation system in the world, after Dubai and Vancouver, the Caisse said. The network would operate 20 hours a day, seven days a week.

About C$5 billion in private real-estate developments could be generated along the chosen route, Caisse de Depot Executive Vice President Christian Dube said in the statement.

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