CPPIB, Ontario Teachers partner with Mexican infrastructure firm to purchase toll road

The C$278.9 billion ($214 billion) Canada Pension Plan Investment Board and C$171.4 billion Ontario Teachers’ Pension Plan, both of Toronto, have formed a partnership with a Mexican infrastructure firm to purchase minority stakes in a toll road in Mexico, said separate news releases from CPPIB and OTPP.

CPPIB and Ontario Teachers together invested 19.4 billion pesos ($1.05 billion) in exchange for shares representing 49% of Newco, the partnership the pension funds are creating with infrastructure firm Impulsora del Desarrollo y el Empleo en America Latina that will now own the Arco Norte toll road.

IDEAL is contributing its 99% equity interest in Autopista Arco Norte, the operator of the toll roadto Newco. CPPIB will own 29% of Newco, while Ontario Teachers will own a 20% stake. IDEAL will own the other 51%.

“We are thrilled to partner with IDEAL and CPPIB on a critical transportation asset in Mexico. This investment provides a strong foundation for continued growth of our infrastructure portfolio in Mexico and the rest of Latin America,” said Andrew Claerhout, senior vice president, infrastructure and natural resources at OTPP, in its news release. “Arco Norte is an attractive asset with long-term growth potential that will provide income to pay pensions.”

As of March 31, CPPIB’s actual allocation to infrastructure was 7.6%. OTPP doesn’t have a designated infrastructure allocation.