TransCanada is looking to expand its Mexico operations after White House killed its proposed Keystone XL pipeline.Paul B. Connor
At least two groups that include Canadian pension funds are planning to submit bids this week for a minority stake in TransCanada Corp.'s Mexican pipeline business valued at about $2-billion, people with knowledge of the matter said.
Canada Pension Plan Investment Board, Public Sector Pension Investment Board and Borealis Infrastructure Corp. have formed a consortium to make an offer for the stake of as much as 49.9 per cent of the business, according to the people, who asked not to be identified because the matter is private.
Caisse de Depot et Placement du Quebec's new Mexican joint venture, CKD Infraestructura Mexico SA, also is preparing to make a proposal for the pipeline stake, the people said.
At least three other suitors are exploring bids, they said.
"We are in the process of seeking passive investors to take a minority stake in our Mexico natural gas pipelines business," Mark Cooper, a spokesman for TransCanada, said Monday in an e-mailed statement. "We will not be providing any further updates or responding to speculation until a deal is announced."
Representatives of CPPIB, Borealis, PSP and the Caisse declined to comment.
Mexico represents a unique opportunity for the Canadian pension funds, which have a long history of investing in infrastructure assets around the globe. In addition to the Caisse's joint venture in the country started last September, Canada Pension and Ontario Teachers' Pension Plan teamed up with a local partner in June to make their first investment in Mexican infrastructure, a toll road operator in the country.
The Mexican government recently implemented a four-year, 7.7-trillion peso ($411-billion) plan for infrastructure investments targeting energy, transportation and other projects.
Its focus on sound economic and monetary policy over the past decade has drawn the attention of long-term investors like Canadian pension funds at a time when other global investors are running away from emerging markets, Caisse Chief Executive Officer Michael Sabia said in an interview in September.
TransCanada, based in Calgary, is aiming to sell its minority stake in the Mexican pipeline to help finance its $10.2-billion purchase of Columbia Pipeline Group Inc. that was announced in March. The company is also looking to sell a portfolio of U.S. Northeast merchant power plants to help finance the transaction.