A new partnership recently announced by Fiera Infrastructure and EllisDon Capital represents a vote of confidence in the future of the Canadian P3 sector by both parties and gives the latter added opportunities to innovate on the delivery end of P3 contracts, say executives with the firms.
The partnership, announced in late January, acquired EllisDon’s interest in its existing portfolio of P3 projects and has the right of first offer over EllisDon’s future P3 projects.
EllisDon has completed some 30 P3 projects and its existing portfolio contains interests in 10 Canadian P3 projects in four provinces and three subsectors — social, health care and transportation. EllisDon was awarded two additional projects in 2018, both of which will be subject to the partnership’s right of first offer following completion of construction.
“Currently there is still an infrastructure gap that exists across Canada and around the world, and P3s have become a proven delivery model for successfully delivering infrastructure,” EllisDon Capital senior vice-president Joey Comeau said in an interview.
“Specifically in North America, Canada has a nice steady pipeline of projects that will be coming out in the next five years, and while in the U.S. it’s a model that is being more slowly adopted, we are going to be watching and increasingly it is expected more P3 projects will be taken on by procurement agencies.”
Comeau explained the partnership was not necessarily aimed at enabling the firm to bid more effectively on upcoming megaprojects such as the $10-billion-plus phase three GO Regional Express Rail (RER) project or to enhance its competitiveness globally but more with a view to continuing to finance bids as a player in the large pipeline of diverse future projects foreseen here in Canada.
“The leap was made from EllisDon’s perspective in order to recycle capital from our long-term investments into future projects and opportunities. At the same time we wanted to retain an ownership interest and continue to be able to act as a counter-party to the project stakeholders,” he said. “That was important from our perspective, it was important to find a long-term partner alongside of that.”
Comeau said better capitalization means more innovation is possible on the delivery phase of P3 projects.
“It is not just about the risk transfer but it is about creating the competitive tension during the pursuit phase and as well during the delivery phase where you are not just looking at the construction aspect but you are looking forward to how you are going to operate or maintain that facility on a long-term basis.
“When you have one consortium looking beyond its immediate phase that it is in and looking towards the future, you find innovative measures to either be able to increase the quality of service that you are providing or to reduce the cost of that service to the taxpayer,” he said.
The ability to innovate and offer unique delivery solutions is important not only for megaprojects but for all types of projects, Comeau said.
“The RER phase 3, the electrification of the line and other megaprojects receive a lot of press, don’t get me wrong, but there is a very steady pipeline of social projects and smaller transit projects. While they don’t get the headlines, they in themselves are actually quite innovative and that is frankly where we have found most of our success,” he explained.
Both Comeau and Fiera Infrastructure vice-president Ryan Gow noted while Canadian P3s would be the focus of the partnership, other opportunities would be considered as they arise.
“This is a great opportunity to partner with EllisDon. They are the leader and most successful in pursing P3s in Canada, so the opportunity to partner with them on Canadian P3s and, as Joey mentioned, potentially leverage that to new markets in the future if that opportunity arises is certainty something that we are aligned with,” said Gow.
“As a global infrastructure investor we do think globally but we look for the opportunities in each jurisdiction we are participating in and in this case it was the Canadian P3 market.”