The Bank of Montreal’s investment banking arm is launching a U.S. power, utilities and infrastructure group as it looks to expand its footprint south of the border.
BMO Nesbitt Burns has hired three new managing directors in New York – all of whom specialize in the sector and come from the U.S. office of its domestic rival, RBC Dominion Securities.
The infrastructure space has seen a flurry of deal-making in recent years, as investment funds seek out long-term projects with stable cash flow and governments look to privatize some publicly owned assets.
John Armstrong, BMO’s deputy head of investment banking, said the sector was a “logical” choice for the investment dealer as it looks to increase its presence in the United States, given both the size of the opportunity and the bank’s familiarity with the Canadian infrastructure industry.
“There is a lot of capital-chasing infrastructure investments today – probably near-record levels of capital,” Mr. Armstrong said.
Global infrastructure funds have an estimated US$500-billion of assets under management dedicated to the infrastructure sector, according to data from Preqin cited in BMO’s news release.
The appeal is largely due to the sector’s consistent and predictable returns, Mr. Armstrong said. Additionally, infrastructure assets can be somewhat of a hedge against inflation, given their “long lives,” he added.
Paul McNutt, most recently RBC’s co-head of power, utilities and infrastructure investment banking at RBC, will head up BMO’s new franchise. He’ll be joined by Andrew Rosenbaum, who brings experience dealing with the non-regulated segment of power and renewable energy, and Andriy Falenchuk, a managing director specializing in mergers and acquisitions in the sector.
Mr. McNutt will co-ordinate global coverage plans with Pierre-Olivier Perras, who oversees the Canadian and international side of BMO’s investment and corporate banking in the infrastructure industry.
Both will report to Mr. Armstrong, BMO’s deputy head of investment banking.
Other major Canadian investment banks have also signalled their interest in the U.S. infrastructure sector, particularly as Canadian power and utilities firms have shown keen interest in doing deals south of the border. TD Securities has singled out the industry as a key focus in the coming years, while Scotia Capital Inc. waded into the U.S. power and utilities market years ago, following clients such as Emera Inc. and Fortis Inc. as they crossed the border.