Canadian Pension Plan to Turn to European Infrastructure Investments

January 24, 2005 ( - The Canadian Pension Plan (CPP) Investment Board is looking across the pond for investments in infrastructure, citing lack of opportunities in Canada.

The board said Monday that it would put $470 million in a European infrastructure fund and a UK gas distribution system, according to the CBC. The board claims that this is because the CPP is unable to find investments that provide stable returns and provide a hedge against inflation domestically.

The two funds are the Macquarie European Infrastructure Fund – which will buy electricity and gas transmission and distribution networks, water and sewerage companies, rail, airports, communications infrastructure and toll roads – and the Wales & West gas distribution network. Macquarie will receive $319 million, while Wales & West will get $151 million, according to the CBC. The move will almost certainly draw ire from groups within the country who claim that the CPP Investment Board is taking away jobs domestically by investing internationally.

Canada is facing a multibillion-dollar infrastructure deficit, according to the CBC, with the nation’s federation of municipalities claiming the shortfall at their level alone could be over $60 billion. The total assets available to the CPP are valued at over $75 billion as of September 30, 2004.

The CPP board claims that infrastructure funds provide higher expected returns that bonds, and are also a good hedge against inflation.

“This is the type of regulated asset we are ideally looking for and are disappointed that there are so few domestic opportunities that meet our investment criteria,” said David Denison, president and CEO, according to the nation’s news network.