(Bloomberg) Caisse de Depot et Placement du Quebec, Canada’s second-largest pension fund manager, is teaming up with Dubai-based DP World Ltd. to create a C$5b (US$3.8b) venture that will invest in ports around the world, including regions such as Asia and Latin America.
Caisse de Depot et Placement du Quebec, Canada’s second-largest pension fund manager, is teaming up with Dubai-based DP World Ltd. to create a C$5b (US$3.8b) venture that will invest in ports around the world, including regions such as Asia and Latin America.
DP World, which operates ports from China to South America, will own 55 percent of the unnamed venture, with the Montreal-based Caisse controlling the remainder, according to a statement issued Friday. The Caisse will begin by buying a 45 percent stake in two of DP World’s Canadian container terminals in Vancouver and Prince Rupert, British Columbia for C$865m.
Michael Sabia, Caisse’s chief executive officer, said the Dubai-based firm is a world-class port operator that will give his fund better access to potential transactions and drive higher returns.
“We do believe that value over the medium-to-longer term gets created through excellent operations not through financial engineering and therefore we like to invest with really good operating partners,” Sabia said in an interview Friday. “They have certainly established themselves as that.”
Infrastructure is an asset class the Caisse has been targeting for years, amid expectations that future returns will exceed those of publicly traded stocks and bonds. The Caisse, which manages the public pension fund in the province of Quebec, counts a 27 percent stake in Australia’s Port of Brisbane in its infrastructure portfolio.
The Caisse will try to build a portfolio of ports that includes some that operate like a utility, with steady cash flows, and others where there is a strong growth trajectory in volumes and revenue and therefore operating earnings, Sabia said.
“We’re interested in building a portfolio in ports that accomplishes both of those things.” he said.