Canadian pension scheme CDPQ earmarks more cash for infrastructure

[November 13, 2019]  By Clara Denina and Simon Jessop

LONDON (Reuters) - Caisse de dépôt et placement du Québec (CDPQ), one of Canada's biggest state pension investors, plans to potentially double its allocation to infrastructure to as much as 15% over the next four years.

In a world of low returns from traditional fixed income markets and concerns around the stability of stock market returns, institutional investors are increasingly looking to invest more in private markets such as infrastructure, among them Australian's biggest scheme, AustralianSuper.

CDPQ currently manages around C$326 billion ($246.39 billion) of which around C$22.8 billion, or 7%, is in infrastructure, including a 13% stake in Britain's Heathrow Airport and 30% in the Eurostar train system connecting London to Paris and Amsterdam.

"We have about 25 portfolio companies and seven offices for infrastructure. Right now, the plan is to grow the share of infrastructure in the overall mix of CDPQ," Emmanuel Jaclot, head of infrastructure at CDPQ told Reuters.

"Transport is going to remain at between a third and a half of what we do, and the rest is going to be energy and renewables," he added.

CDPQ's infrastructure business has already grown threefold over the last five years, with the fund attracted by the stable and predictable cash flows from assets such as ports, airports, railways, roads and power generation facilities.

With CDPQ seeking to decarbonize its investment portfolios and achieve net zero emissions by 2050, renewables is a particular focus, part of a broader global shift to cleaner energy in the battle against climate change.

Global renewable energy capacity is set to rise by 50% in five years' time, data from the International Energy Agency (IEA) showed.

CDPQ holds stakes in big renewable energy companies in North America and India and also owns offshore wind farms in the UK.

The Canadian pension scheme also continues to invest in fossil fuels, however, having just bought 90% of TAG, a natural gas pipeline in Brazil, jointly with France's Engie for $8.6 billion.

As well as potential public project investments in renewables, CDPQ is also looking to invest more in transport, including in a potential third runway at Britain's busiest airport Heathrow, Jaclot said.

It also plans to increase its investment in Eurostar, should a plan to merge it with Franco-Belgian company Thalys go ahead, to 30% of the merged entity.

(Editing by Kirsten Donovan)

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