The Caisse de dépôt et placement du Québec is partnering with a group of major Mexican institutional investors in a $2.8-billion fund to take advantage of anticipated infrastructure upgrades in that country.
The Caisse (CDPQ) said on Monday it plans to commit $1.43-billion over a five-year period to the investment vehicle, while its partners – including XXI Banorte, SURA and Banamex – are to kick in $1.38-billion.
CDPQ will hold a 51 per cent interest in the fund. The partnership between leading Mexican financial institutions and a large international pension fund manager "constitutes a first in North America," the Caisse said in a news release.
"When we look around the world, especially in the infrastructure sector, Mexico stands out as an exceptional country to invest in," CDPQ president and chief executive Michael Sabia said.
"By combining their in-depth knowledge of the market and local networks with our infrastructure expertise, we are creating an innovative investment platform that is ideally positioned to find and invest in the best Mexican infrastructure projects."
Mexico's economy is poised for significant growth with major structural reforms afoot as well as favourable demographics and strong demand from the United States, CDPQ said.
The Mexican government has unveiled a four-year, $600-billion (U.S.) plan for private, public and local infrastructure investment, including energy and transportation.
CDPQ and its partners say they will pursue "a wide range of investment opportunities in several sectors of the infrastructure market, such as energy generation (including renewable energy), transmission and distribution, transportation and public transit, among others."
Quebec's giant pension fund manager, which invests money for public and private pension and insurance plans, opened an office in Mexico last year as part of an international expansion.
Earlier this year, CDPQ said it would invest $267.7-million (Canadian) in a joint venture with Mexico's largest infrastructure firm, Empresas ICA, to initially operate four highway toll concessions.
As part of the deal unveiled Monday, the Mexican consortium partnering with CDPQ - CKD Infraestructura México S.A. de C.V - will acquire 49 per cent of CDPQ's equity stake in the toll-road platform.
Last year, CDPQ's real estate arm – Ivanhoé Cambridge – said it planned to invest up to $500-millon (U.S.) in mixed-use urban communities in Mexico's major cities, in a partnership with U.S. private equity firm Black Creek Group.
So far, CDPQ's global infrastructure portfolio is valued at about $11-billion (Canadian). Investments include the Port of Brisbane in Australia, Heathrow Airport in London, London-to-Paris high-speed rail service Eurostar and the Colonial Pipeline in the U.S.
The fund wants to double the size of the portfolio by 2018.