There will undoubtedly be opportunities for Canadians to take part in these initiatives and the new direction in Japan. In March, the Ontario Municipal Employees Retirement System (OMERS), one of Canada’s largest pension plans, through its strategic investment arm OMERS Strategic Investments (OSI), entered into a co-investment agreement with Japan’s Government Pension Investment Fund (GPIF), the world’s largest pension fund, and the Development Bank of Japan (DBJ). The co-investment agreement sets out a framework under which GPIF and DBJ may participate in a range of investment opportunities, including energy projects, that are sourced and actively managed by OMERS through its various investment arms.
The first direct outcome of the co-investment agreement was the participation by GPIF and DBJ, at a capital commitment of US$2.5 billion, in the Global Strategic Investment Alliance (GSIA). The GSIA is a co-investment program developed by OMERS that deploys the expertise of the OMERS infrastructure investment arm, Borealis Infrastructure, for the benefit of OMERS and its GSIA co-investment partners. The participation by GPIF and DBJ brings the total capital committed to the GSIA to US$11.25 billion. A story in April by Reuters said that OMERS’ commitment to the GSIA is $5-billion.
Borealis, which owns a majority of Bruce Power in Ontario, identifies and manages all GSIA assets. In fact, the GSIA alliance members have exclusively engaged Borealis to identify, pursue and manage infrastructure investments on their behalf.
On July 2 Mitsubishi Corporation announced that, through its participation in the GSIA, it had entered into a binding agreement to make GSIA’s first investment in the Midland Cogeneration Venture (MCV), the largest natural gas fired, combined cycle cogeneration plant in the United States.
At the same time, Japanese companies are showing significant interest in Canadian infrastructure investment. As reported in Lexpert magazine, Chris Bennett, who leads the project finance team at Osler, Hoskin & Harcourt LLP in Toronto, recently said the pace of big-ticket civil-infrastructure projects in Canada has reached a record-breaking scale. “The level of activity has been intense. ... I speak to a number of senior counsel in this space fairly regularly and consensus is the first part of this year has probably been the busiest we have ever seen the infrastructure bidding market. The amount of capital required for these projects – the sheer size of them – is unparalleled in the Canadian market in the past.”
The opportunities to invest in Canadian infrastructure projects, particularly through public private partnerships (P3s), are attracting attention amongst Asian investors. Greg Lewis, a partner at Bull, Housser & Tupper LLP in Vancouver said, “I know Japan and South Korea have an interest and some companies from Asia are interested in participating in North American P3s. There have been events in Tokyo with North American participants explaining the P3 model. “The big Japanese and Korean conglomerates I think are quite interested in doing business in North America and P3 is a fairly attractive investment. While it’s not risk-free, it’s probably a reasonable return for the risk.”