There is still only one confirmed project in the Canada Infrastructure Bank’s (CIB) portfolio but its president and CEO Pierre Lavallee offered significant reason for optimism that investor interest in the year-old Crown corporation is high during a recent appearance at a public-private partnership conference in Toronto.
Lavallee, hired in May, told delegates attending the 26th Annual Canadian Council for Public-Private Partnerships (CCPPP) conference on Nov. 6 there are 55 project proposals under discussion, 10 of which the CIB is “actively engaged in.” In a subsequent interview he said the bank was “pleasantly surprised” at the number of unsolicited proposals that had been made, that there was “strong” interest from foreign investors and that Canadian pension funds are also warming up to the platform.
“There are a couple of layers of surprise,” he said. “One is that there are so many of them (proposals) overall, for such a short period of time. That so many people have approached us, that is a pleasant surprise. Secondly, the proportion that are unsolicited proposals is also a pleasant surprise. In our mind there is real thirst for investment and for the private sector taking risks and for thinking creatively about solving issues.”
The CIB, announced as an arm’s length agency under the responsibility of the federal Ministry of Infrastructure in November 2016 and launched last year, is mandated to invest $35 billion from the federal government into infrastructure projects.
Lavallee told the CCPPP audience, which included numerous foreign P3 participants, that the CIB aims to spend at least $5 billion for public transit systems, $5 billion for trade and transportation corridors and $5 billion for green infrastructure projects.
It’s better to make good investments than just fast investments
— Pierre Lavallee
Canada Infrastructure Bank
Projects must meet the criteria of supporting the Canadian public good and they must have a revenue-generating component, said Lavallee.
He acknowledged there are frequently expressed concerns that only one project has been announced so far — Montreal’s $6.3-billion REM transit project, which the CIB is supporting with a $1.28-billion secured loan. Lavallee told the CCPPP delegates the complex projects being discussed by the CIB require ample due diligence.
“It’s better to make good investments than just fast investments,” he said.
Later he explained, “The reality is, a lot of projects are very complex in their nature, with multiple moving parts, multiple stakeholder groups, and part of a successful project is that you have to assemble and harness all of these different interest stakeholders, so the project ends up being good from their perspective, not just from the investors’ perspective or the promoter’s perspective or the sponsor. All of them together. That takes time.”
Lavallee added, “I think there is really strong interest, really strong potential, and I think we have a great set of opportunities in front of us.”
One of three scenarios where the CIB will play a role is in “standardized investments for scalability.” That is where projects in one small community might not be the size investors are looking for but with like projects in several communities bundled together, “we may be able to get the bundle to the scale to get international and domestic investors to invest alongside,” he said.
“Absolutely,” he said, infrastructure projects in multiple First Nations qualified in the scalability category.
Lavallee said there has been interest from foreign investors since the day he was hired.
“It is another one of the pleasant surprises, even as I arrived in the role, people saw the announcements, they saw that the bank was taking shape, they started calling to say, when you get to that stage that you have an investable project, please include us,” he said. “There is a really strong interest for investment in Canada.”
Another speaker at the conference, Joe Mancinelli, an international vice-president with the Labourers’ International Union of North America, indicated LIUNA had spoken to CIB officials and was interested in investing in transportation infrastructure for Toronto, including subways and major new access roads to the downtown, possibly via tunnels.
Lavallee said a new roadway would meet several CIB conditions — it would generate revenue, enhance trade and transport and have a green component.
“I think that if they are relieving congestion, if they are expanding roadways, presumably trying to solve a congestion issue, congestion causes excess greenhouse gases, it relieves some of that tension, it may not be a green infrastructure project first but it may have positive impacts,” he said.
CIB hires new head of project development
TORONTO — Canada Infrastructure Bank (CIB) president and CEO Pierre Lavallee has announced the hiring of Francois Lecavalier as head of project development, effective Dec. 3.
A Nov. 6 statement said Lecavalier has almost 30 years of experience leading infrastructure and private equity projects in Canada and Europe.
His expertise includes origination and execution of corporate finance deals, portfolio management, business development and corporate governance.
He will lead a team whose mandate will be to “provide advisory services to public proponents of infrastructure projects, incubate new projects from idea to bankability, build and maintain a national inventory of new infrastructure projects, and codify global best practices on developing new infrastructure,” said the release.
“Francois adds depth and breadth to our team as he is deeply familiar with leading infrastructure and private equity projects,” said Lavallee in the statement.
“We will count on his expertise to advise on potential investments, incubate new projects and create a national inventory of potential infrastructure projects.”
Most recently, Lecavalier was senior vice-president at the Business Development Bank of Canada where he managed the bank’s $600-million Cleantech Scale Up Initiative.
Previously, Lecavalier held the position of vice-president of SNC-Lavalin Capital and various positions at the London-based European Bank for Reconstruction and Development.