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Federal government solicits big investors for infrastructure bank


Prime Minister Trudeau and Finance Minister Bill Morneau.

Prime Minister Trudeau and Finance Minister Bill Morneau.

Consulting engineering firms will be busy with infrastructure projects in the coming years if the Liberal government’s plans for a Canadian Infrastructure Bank bear fruit.

Prime Minister Justin Trudeau and several cabinet ministers had a prolonged meeting with big investor groups on Monday, November 16 in downtown Toronto at the Shangri-La Hotel — steps from the Trump Tower and a few blocks from the hotel where the Canadian Council for Public-Private Partnerships (CCPPP) was holding its annual P3 2016 conference.

Trudeau met behind closed doors with Canadian pension fund managers such as the Ontario Teachers’ Pension Fund and Quebec’s Caisse de dépôt et placement, as well as the big banks, and BlackRock of New York, the world’s largest asset manager.

During the meeting, which was said to be “unprecedented,” Trudeau was promoting the proposed Canadian Infrastructure Bank which was announced in Parliament on November 1 as part of the government’s Fall Economic Statement.  The government is going to seed the bank with $35 billion of the previously announced infrastructure funds, but is hoping that for every $1.00 it invests, the private investors will come through with $4.00.

According to an article in the Globe and Mail, projects funded under the new Federal Infrastructure Bank would involve private investors more deeply than in typical P3 projects. Says Bill Curry in an article on November 13:  “Projects envisioned by the bank would go beyond traditional P3s, in which a private firm or consortium is contracted to build and maintain a public asset. The difference would be an increased focus on attracting partners who would make an equity investment in the project in exchange for a negotiated return.”

The same day, Paul Wells in the Toronto Star said the government plan has multiple potential “hitches.”  He wrote: “There is no real international model for the infrastructure bank [Finance Minister] Morneau and his colleagues are trying to build. There are reasons to believe the demand for decent rates of return is very large, but connecting demand to a reliable supply of projects is tricky.”

Some commentators believe the election of Donald Trump as president in the U.S. will encourage investors to flock to Canada, seeing it as a more stable home for their money. Trudeau has pointed out that in a post-Brexit world that could be drifting to anti-globalism, “Canada is open for business.”

Others see hope in Trump’s election, in that he promised to build roads, ports and other transportation infrastructure. Overlooking the fact that campaigning Trump trumpeted buy-in-the-U.S. policies, some Canadian P3 companies believe they will benefit from greater demand south of the border.

To read a November 13 article in the Globe and Mail, click here.

To read a November 13 article in the Toronto Star, click here.

Post revised November 17, 2016, 9.34 a.m.