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Monday October 26, 2020

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Canadian Pension Funds to Acquire Chicago Skyway Toll Road, Fits Well with The Pension Funds' Strategies

Nov 14, 2015 12:17 AM EST | By Jean-Claude Arnobit
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Canadian Pension Plan Investment Board, OMERS, Ontario Teachers' Pension Plan, Skyway Concession Company LLC, acquisition
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Canadian Pension Funds to Acquire Chicago Skyway Toll Road, Fits Well with The Pension Funds' Strategies

(Photo : Justin Sullivan | Getty Images News)

A consortium that consists of the Canadian Pension Plan Investment Board (CPPIB), OMERS and Ontario Teachers' Pension Plan have announced in a joint statement that they will be acquiring Skyway Concession Company LLC for a total of $2.8 billion, according to a press release issued by OMERS.

The acquisition of Skyway is in line with the strategy of the three pension funds.

Cressida Hogg, the managing director and head of infrastructure at the CPPIB, said in the press release that Skyway presents a rare opportunity for them "to invest in a mature and significant toll road."

"This investment fits well with CPPIB's strategy to invest in core infrastructure assets with long-term, stable cash flows in key global markets," she said.

Ralph Berg, the executive vice president and global head of infrastructure at OMERS Private Markets, adds in the press release that the investment in Skyway aligns with the company's "strategy to acquire assets that will generate stable and consistent returns."

"Our investment in Skyway also fits with our goal of growing our assets under management in the North American infrastructure space," he said.

Andrew Claerhout, the senior vice president of Infrastructure at Ontario Teachers, adds in the press release that the acquisition of Skyway provides "inflation-protected returns."

"The long-dated nature of the concession closely reflects the investment horizon of Ontario Teachers' and our partners at CPPIB and OMERS," he said.

The Wall Street Journal adds that Canada's pension funds have been investing actively in bridges, toll roads, power utilities and other infrastructure projects.

These types of investments don't provide the same high returns that equity investments usually give, but often provide more stable revenue streams.

The Wall Street Journal adds that 7.1 percent of CPPIB's assets are infrastructure while OMERS has 18 percent of their 72 billion Canadian dollars in infrastructure.

Ontario Teachers has about 23 percent of their 152.4 billion Canadian dollars in infrastructure.

The Wall Street Journal adds that toll road investments, though, are not without risks.

The operator of a toll road in Indiana has filed for bankruptcy last year after struggling with excess debt and lower-than-expected traffic.

CPPIB, OMERS and Ontario Teachers will each own a 33.33 percent interest in Skyway, according to the press release.

The three pension funds will contribute an equity investment of approximately $512 million each.

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