Canada is moving to bring private investment into its four largest airports, a plan confirmed by Prime Minister Mark Carney following the country’s inaugural Canada Investment Summit. Under the proposed structure, the federal government would retain ownership of the land and airport assets, while private partners would be brought in to help improve the traveller experience.
The move comes as Canada looks to other global markets for guidance on how private capital can be integrated into public infrastructure. Roger Pim, managing director of strategy and capital formation at Ireland-based infrastructure and energy investor NTR, said Canada is in a strong position because it can draw lessons from how similar deals have played out elsewhere.
“It isn’t one size fits all, but it does require the government to think very carefully about the appropriate regulatory environment, almost industry by industry,” Pim said.
Lessons From Europe and Pension Fund Experience
Pim pointed to Canadian pension funds’ long track record of investing in airports abroad as a resource the government can now tap into domestically. “Canadian pension funds are famous around the world for being absolute leaders in the infrastructure field,” he said, noting their extensive activity across Europe and Asia.
He said Europe offers both cautionary tales and success stories when it comes to private capital in public assets. In the United Kingdom, he said, airport quality improved noticeably following private investment, though pricing has remained a point of contention. “When you get it right, it can work very well,” Pim said.
Pim also raised the issue of capital needed to fund energy infrastructure at facilities like airports, particularly as the sector works toward a transition to clean power. He said the scale of investment required over the coming decades is unlikely to come from government alone. “Governments can’t provide that. You need to stick to private capital,” he said.
Building Public Support and Closing the Infrastructure Gap
According to Pim, hosting a high-profile event like the Canada Investment Summit can help build broader awareness and support for a specific investment strategy. “You have to make sure that you’ve got public support and really selling why this infrastructure investment is needed,” he said.
He added that the current economic uncertainty may actually create favourable conditions for infrastructure investment, since such assets can offer inflation protection along with stable, predictable cash flows. Still, he cautioned that infrastructure investment is not a cure-all for investors.
A report issued earlier this year by PricewaterhouseCoopers Canada found that the country faces a $34 billion infrastructure spending gap compared with peer nations, despite Canada already spending roughly US$145 billion annually in this area. The International Centre for Pension Management has previously said governments need to foster a positive investment environment to help attract private capital operators to needed infrastructure projects.
Canada's Infrastructure Spending Gap
Will the Deal Structure Suit Canada’s Largest Pension Funds?
Pim said he is watching closely to see how the specific deals are eventually structured, noting that Canada’s largest pension funds — often referred to as the Maple 8 — tend to pursue the biggest available ticket sizes. He said that in Europe, these types of investors have primarily concentrated on large-cap infrastructure assets.
“I would argue a lot of the really interesting opportunities we’re seeing now is in that small- to mid-market space — that potentially is a challenge for them if they’re only able to write very large tickets [and] I think they’ll miss some of that opportunity,” Pim said.
This article is for informational purposes only and does not constitute financial, investment, or legal advice. Consult a licensed financial advisor before making investment decisions.
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