Canadian pension funds eye infrastructure investments

Canadian pension funds are setting up local investment teams drawn by a growing pipeline of infrastructure investments on offer by state governments.

Perpetual Corporate Trust general manager Andrew Cannane said two Canadian pension funds - OP Trust and Borealis — had already established offices in Sydney staffed by employees from Canada with more to follow.

Cannane said Perpetual Corporate Trust was aware of the movements by the pension funds as it currently provides trustee services for the investments of six Canadian pension funds and had recently visited other funds in Canada which were "are moving to the next stage of their commitment to Australia".

He said the funds were being drawn to the Australian infrastructure market as a result of the Federal Government's "asset recycling initiative" that provides state governments a 15 per cent bonus payment for funds invested in new infrastructure projects from the proceeds of selling old assets.

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Cannane said there had been a strong response to the policy with state governments moving to sell current assets including the Port of Melbourne, the NSW and QLD poles and wires, the Port of Gladstone, the Port of Townsville and BG Pipelines.

"We are expecting fierce competition for these assets which may make Australia a relatively expensive place to invest and result in returns being bid down."

Canadian pension funds have already secured some large infrastructure assets with Caisse de depot purchasing a 27 per cent stake in the Port of Brisbane, the Canada Pension Plan Investment Board and Dexus privatisating the Commonwealth Property Office Fund and the Ontario Teachers' Pension Plan purchasing Leighton's NextGen assets.