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Chile's rich copper deposits have been a long-standing lure for adventurous Canadian mining companies; now its infrastructure projects are making it a destination of choice for sophisticated investors looking for a safe place to sock away their money for the long term.

In the past few years, investors including the Ontario Teachers' Pension Plan, the Canada Pension Plan Investment Board, and publicly traded Brookfield Asset Management Inc., have sunk billions of dollars into Chilean infrastructure.

Teachers, for example, has snapped up water utilities across the South American country valued at about $1-billion.

Last year, Brookfield led a group, including the CPP and the British Columbia Investment Management Corp., that bought Chile's largest electricity transmission firm, HQI Transelec Chile SA, for $1.55-billion (U.S.).

In fact, Canada has become the third-largest foreign investor in Chile, behind the United States and Spain, responsible for 16.4 per cent of foreign direct investment in the country. Last year, Canadians invested $1.8-billion in Chile, and a growing portion of that is coming from institutions investing in infrastructure projects, said Carlos Mena, executive vice-president of the Chile's Foreign Investment Committee.

At first blush, a Latin American country with a tumultuous political history seems an incongruous place for Canada's big institutions to be putting the funds they have earmarked for stable, low-risk assets.

That was the initial reaction of Mark Wiseman, senior vice-president of private investments at the CPP's investment board, when Brookfield approached him about joining the investment group it was assembling to bid for Transelec a few years ago.

"That was really at the nascent stages of our infrastructure program, and I think some of us, including me, said Chile sounds like Latin America, which sounds like high risk, which sounds like not exactly the type of place we want to be starting our investment program in infrastructure ... which we generally view as a lower-risk, lower-return-type asset," Mr. Wiseman said.

As the pension fund started to evaluate Chile as a place to invest, however, Mr. Wiseman said it discovered the dramatic transformation that has taken place there over the past fifteen years.

In the early 1990s the Chilean government made it a priority to bring in outside investment to improve its neglected infrastructure, Mr. Mena said.

"In the years before, investment in those sectors was very delayed. We needed to do this because we needed to improve our roads, our ports, our general infrastructure activities. The philosophy behind this decision was the state could not make this investment by itself because in our economic policy we reoriented the investment of the state to more social investments," he said.

Measures taken to attract foreign money have included reducing or eliminating foreign ownership restrictions on Chilean assets, and implementing an attractive tax system and investment rules that remain in place if a different political party takes power. Chile has also signed free-trade agreements with 58 countries, including Canada, and most recently its treaty with Japan is slated to come into effect on Sept. 3.

Prime Minister Stephen Harper visited Chile last month in recognition of the 10th anniversary of its free-trade agreement with Canada, and in a speech there mentioned the strong investment ties that have diversified from the mining sector into new areas.

"One of the main drivers of investment in Chile is that the laws here treat foreigners, in almost every case, the same way as they treat Chileans. They are non-discriminatory. In the past couple of years Chile has also undergone a decoupling from the rest of Latin America for the first time, which is being reflected in the debt markets. Our credit rating is higher, our country risk has dropped, and we'll see if this helps the markets realize that Latin America is not all one place," said Cristian Shea, a Santiago-based lawyer who focuses on foreign direct investment and private equity.

Economist Intelligence Unit, which is owned by the publisher of The Economist, ranks Chile first in country forecasts for the 12 Latin American companies it covers, and 19th among 82 countries over all. Chile heads the regional rankings in seven of 10 measures of its business operating environment, taking into account factors including its network of free-trade agreements, investment in infrastructure and foreign investment policy.

In terms of Canadian-Chilean relations, there's also a cultural fit between the two countries that comes from similarities including diverse geographies, relatively small populations, and low-key, hard-working people, Mr. Shea said.

Brookfield's approach toward acquisitions, which includes encouraging local autonomy and management teams, appears to have helped it with its investments in Chile, said managing partner Jeff Blidner. A long-time investor in South America, Brookfield traces its origins back to a power generation company established in Brazil in 1899. Its long history in South America has also included investments in mining, real estate and timber.

The positive changes that have taken place in Chile as a result of its infrastructure policies are dramatic, Mr. Blidner said.

"If you visit there, it really is unbelievable. The road systems are fabulous. There's a toll road from the airport to the centre of the city. It used to take two hours to do that trip, and now it takes 20 minutes."

Since 1990, the country's poverty rate has dropped to 13 per cent from 43 per cent as a result of economic reforms, including encouragement of foreign investment, Mr. Mena said. Foreign capital has also allowed the government to hold on to the profits generated from strong copper prices, providing a safety net in the event of a downturn, he said.

Investors drawn to Chile, however, could find acquisition opportunities becoming more limited in this relatively small country.

"It is getting competitive," said Jim Leech, senior vice-president at Teachers. "We're fortunate we got in early in the wave."