Originally published in ReNew Canada, November/December
Although the current market downturn is affecting mergers and
acquisitions activity worldwide, the current credit crunch may not
affect the infrastructure sector as much as other industries.
Borrowers with high quality assets, such as infrastructure
businesses, may find a more favourable market for their debt
requirements. Even with an absence of available debt financing,
cash-rich investors, such as the Canadian pension funds, are
wellpositioned to take advantage of investment opportunities as
public company values decrease and other potential buyers may find
it more difficult to obtain necessary leverage.
With significant pools of funds earmarked for infrastructure
investments, Canada does not provide enough opportunities for the
Canadian investors to deploy all of their capital.
Transmission infrastructure is an attractive investment for
Canadian pension funds, but they have been forced to look beyond
Canadian borders for opportunities. A good example of this
phenomenon is the recent investment by Borealis Infrastructure, as
part of a consortium, in Oncor Electric Delivery LLC, the largest
transmission and distribution company in Texas.
While the Canadian pension funds have focused primarily on
acquiring existing assets in OECD (Organization for Economic
Cooperation and Development) countries, with more funds being
raised for the infrastructure sector and competition for
infrastructure assets intensifying, they may need to search further
and wider afield for investment opportunities, including in
emerging markets. This trend can be seen in the recent acquisition
by Ontario Teachers' Pension Plan, together with Morgan Stanley
Infrastructure, of SAESA Group, a Chilean electric distribution,
transmission and generation company.
Canada is well-positioned to access infrastructure funds in
order to replace and expand its infrastructure. However, with more
money being invested outside of Canada, Canadian governments need
to ensure that enough opportunities exist in Canada in order to
make sure that our country receives its share of this private
The content of this article is intended to provide a general
guide to the subject matter. Specialist advice should be sought
about your specific circumstances.
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The Canadian Office of the Superintendent of Financial Institutions ("OSFI") recently ruled that a bank cannot promote comprehensive credit insurance ("CCI") within its Canadian branches under the Insurance Business (Banks and Bank Holdings Companies) Regulations (the "Regulations").
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