CDPQ and leading Mexican institutional investors create co-investment platform to invest in infrastructure opportunities in Mexico
Caisse de dépôt et placement du Québec (CDPQ), a Canadian long-term institutional investor, and a consortium of Mexican institutional investors (including Mexico’s three largest Afores) joined under CKD Infraestructura México, S.A. de C.V. (CKD IM), a newly-created trust, announced today the creation of a co-investment vehicle for infrastructure projects in Mexico. This innovative partnership between leading Mexican financial institutions and a large international pension fund manager constitutes a first in North America. The new co-investment platform will combine world-class infrastructure expertise with established local networks. The platform will invest up to MXN 35.1 billion (CAD 2.8 billion) over the next five years.
The agreement provides CDPQ and CKD IM with an ideal platform to participate in the expansion and the modernization of Mexico’s infrastructure. Fueled by ambitious structural reforms, favourable demographics and robust demand from the United States, the Mexican economy is poised for significant growth in years to come. Infrastructure opportunities show particular promise in the wake of the government of Mexico’s four-year, MXN 7.7 trillion plan for infrastructure investments, targeting energy and transportation projects, among others.
Over the next five years, the co-investment platform expects to 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.
During this period, CDPQ plans to commit MXN 17.876 billion (CAD 1.43 billion) and CKD IM MXN 17.215 billion (CAD 1.38 billion). CDPQ will hold a 51% interest in the co-investment vehicle. CKD IM, whose shares are listed on the Mexican Stock Exchange, will hold the remaining 49%. Current shareholders of CKD IM are Mexican pension fund managers (Afores) XXI Banorte, SURA, Banamex, Pensionissste and infrastructure fund Fonadin. Together, the Afores holding shares in CKD IM manage 62% of total Mexican pension fund assets.
“When we look around the world, especially in the infrastructure sector, Mexico stands out as an exceptional country to invest in. Given the scope of the opportunities in this sector, we are pleased to join forces with leading Mexican institutional investors. 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,” said Michael Sabia, President and CEO of CDPQ.
CDPQ has been a major infrastructure investor for more than 15 years. Its infrastructure portfolio today is worth more than CAD 11 billion and includes investments in the Port of Brisbane (Australia), Heathrow Airport, Eurostar, and Colonial Pipeline in the United States. By 2018, CDPQ aims to double the size of this portfolio.
“CKD Infraestructura México is the largest consortium of Mexican pension funds created to date. Together, these funds will invest in major projects that will provide tangible benefits for Mexicans, since it has been proven that infrastructure investments contribute to productivity and GDP growth,” said Eduardo Ramos, General Manager of CKD IM. “For us, it was a natural fit to partner with CDPQ, a global investor that shares our long-term vision and brings to the table its experience investing in infrastructure projects worldwide.”
“We believe recent reforms in the energy and infrastructure sectors have opened the possibility of win-win partnerships that will benefit the whole Mexican economy. The platform we are announcing today is perhaps the best example of these new opportunities,” said Marcos Ramirez Miguel, CEO of Grupo Financiero Banorte.
“The creation of this platform establishes a partnership between Mexican funds and a global investor who shares their priorities: a long-term view, a preference for tangible assets, and durable performance,” said Enrique Solorzano, CEO of Afore SURA.
“This partnership illustrates Mexico’s shift toward a new development strategy, investment and growth. Few emerging markets can boast a reform agenda as ambitious as Mexico and we are pleased to participate and highlight the ability of the Mexican funds to launch and lead promising initiatives”, said Luis Sayeg, CEO of Afore Banamex.
“We believe that Mexico is on the right track to fulfill expectations tied to the much-awaited passage of economic reforms enacted at the beginning of President Peña Nieto's administration. The launch of this investment vehicle, which is most certainly the beginning of a brand new chapter in the area of infrastructure deployment in Mexico, will indeed pave the way for future investments that would boost this country's competitive advantages as the aforesaid reforms are implemented and deliver their promise. We at Pensionissste are also convinced that this partnership will serve as the stepping stone for a number of related transactions that should catapult infrastructure investment in the country throughout the coming decade to a new plateau,” said Jose Maria de la Torre, CEO of Pensionissste.
“This new investment vehicle is ideally suited to capitalise on current and future opportunities brought about by the current administration's reforms, benefiting both from CDPQ’s experience in global infrastructure and our strong networks and deep knowledge of the Mexican infrastructure market. We expect these complementary contributions to fuel and strengthen all investment decisions,” said Francisco Gonzalez, CEO of Fonadin.
The co-investment vehicle’s first transaction
As part of the transaction announced today, CKD IM is also acquiring 49% of CDPQ’s equity investment in the ICA OVT platform, announced on June 19, 2015. Completion of this transaction is subject to standard closing conditions and approval from the Mexican authorities.
The ICA OVT operational platform currently holds four toll road concessions: the Mayab tollroad, the Rio Verde – Ciudad Valles highway, La Piedad Bypass and the Acapulco Tunnel. ICA OVT will continue to grow with the acquisition of future assets.
Barclays Mexico acted as sole structuring agent and underwriter of CKD IM. Barclays Mexico also acted as financial advisor to CDPQ in the acquisition of the four toll road concessions.
Caisse de dépôt et placement du Québec (CDPQ) is a long-term institutional investor that manages funds primarily for public and parapublic pension and insurance plans. As at June 30, 2015, it held CAD 240.8 billion in net assets. As one of Canada’s leading institutional fund managers, CDPQ, which marks its 50th anniversary this year, invests globally in major financial markets, private equity, infrastructure and real estate. CDPQ is present in Mexico through its subsidiary, CDPQ México, located in the Mexican capital. For more information about CDPQ: www.cdpq.com.
ABOUT CKD INFRAESTRUCTURA MÉXICO S.A. DE C.V.
CKD Infraestructura México (INFRACK) is a recently created investment vehicle funded by the largest Mexican Pension Funds, with assets under management of MXN 17.2 billion. The CKD will focus its investments in several sectors of the infrastructure market, such as energy generation (including renewable energy), transmission and distribution, transportation and public transit, among others. For more information about CKD Infraestructura Mexico: www.ckdim.com
ABOUT AFORE XXI BANORTE
Afore XXI Banorte: biggest pension fund manager in Mexico. It was created in 2011 after the merger of Afores Banorte-Generali and Afore XXI, and is part of Grupo Financiero Banorte, one of the largest financial groups in Mexico and is co-owned at 50% by IMSS, the federal social security agency. It began operations on January 2012 and in January 2013, Afore XXI Banorte closed the purchase of Afore Bancomer for USD 1.7 billion in a deal that created the largest retirement savings manager in the country.
ABOUT AFORE SURA
Afore SURA: third largest pension fund manager in Mexico and part of the multilatin holding company Grupo SURA, which is listed on the Colombian Stock Exchange and registered with the ADR Level 1 program in the United States. Grupo SURA is also the only Latin American company from the Diversified Financial Service Sector to be part of the Dow Jones Sustainability Index (DJSI), which tracks companies who have become global benchmarks thanks to their best practices in economic, environmental and social aspects. Grupo SURA holds a solid portfolio of investments with core strategic focus in financial services, insurance, pension, savings, and investments sectors. Grupo SURA through its subsidaries is the leading player in the Latin American pension fund industry and one of the main insurance groups in the region.
ABOUT AFORE BANAMEX
Afore Banamex is one of the founding institutions of the Sistema de Ahorro para el Retiro in Mexico. With more than 18 years of experience, Afore Banamex has set the standard of reliability and gained trust of its 8 million clients: It has the most experienced investment team and efficient risk models in the industry. This unique specialization allows Afore Banamex to have the highest investment certificate issued by CONSAR (Comisión Nacional del Sistema de Ahorro para el Retiro) and positions it as leader in financial innovating services.
Afore Banamex renders services nationwide in more than 130 service Modules, Retirement Attention Services (Centros de Atención para el Retiro (CARE) and more than 1,540 Banamex branches. Moreover, it offers professional advisory services with more than 3,000 specialized executives, with a clear vision of short or long-term investment alternatives in voluntary savings plans.
PENSIONISSSTE started operations in December 2008 initially to manage ISSSTE workers pension funds. ISSSTE is a government organization that provides social security for public sector employees in Mexico, including healthcare services, insurance and other services, nursering, recreational and vacation sites, for affiliates. Today, PENSIONISSSTE has MXN 327,148 million in assets under management, representing 4.5 million accounts of both government and private sector employees. PENSIONISSSTE is the 5th largest Afore in Mexico.
Fonadin is Mexico’s National Infrastructure fund, a government sovereign wealth fund, set up to promote the development of national infrastructure in Mexico via public-private partnerships (PPPs), focusing on highways, ports, airports, environment, urban mass transportation, and water.
Barclays is an international financial services provider engaged in personal, corporate and investment banking, credit cards and wealth management with an extensive presence in Europe, the Americas, Africa and Asia. Barclays’ purpose is to help people achieve their ambitions – in the right way. With 325 years of history and expertise in banking, Barclays operates in over 50 countries and employs over 130,000 people. Barclays moves, lends, invests and protects money for customers and clients worldwide. Barclays has been active in the Mexican markets since 1950, and has had a physical presence in Mexico since 1975. Since 2006, Barclays has offered clients investment banking, sales, trading, research and risk management products and services through its Mexico-based bank and broker-dealer.
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