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MARK BLINCH/Reuters

The Canada Pension Plan Investment Board is boosting its sizable holdings in Australia with a deal to invest $515-million in a new toll road near Sydney.

CPPIB, which invests the Canada Pension Plan's $234-billion portfolio of assets, announced Sunday it will join a consortium of investors who will build and operate a new tunnel motorway called NorthConnex, located northwest of Sydney.

CPPIB has already invested over $7-billion in Australia in recent years, acquiring a 25-per-cent interest in the Westlink M7 toll road in Sydney as well as real estate, infrastructure, public equity and other holdings.

"We are excited to be part of this important motorway development project, which is in line with our strategy to invest in attractive global infrastructure opportunities," Cressida Hogg, CPPIB's head of infrastructure, said in a statement.

The tunnel project is expected to cost $2.9-billion, with funding coming from CPPIB, toll road operator Transurban Group, Queensland Investment Corp., as well as from the New South Wales and Australian governments. CPPIB will have a 25-per-cent ownership stake.

Ms. Hogg said the project is being built to relieve traffic congestion north of Sydney.

The new tunnel will connect Sydney's northern suburbs with the city's Orbital road network, reducing freight traffic congesting on an existing arterial road in the region. The nine-kilometre tunnel will be the longest road tunnel project in Australia.

Construction is expected to start this year and finish in 2019.