Pension funds eye TransCanada Mexico pipelines

At least two groups that include Canadian pension funds are planning to submit bids this week for a minority stake in TransCanada Corp.’s Mexican pipeline business valued at about US$2 billion, people with knowledge of the matter said.

Canada Pension Plan Investment Board, Public Sector Pension Investment Board and Borealis Infrastructure Corp. have formed a consortium to make an offer for the stake of as much as 49.9 per cent of the business, according to people who asked not to be identified, because the matter is private.

Caisse de depot et placement du Quebec’s new Mexican joint venture, CKD Infraestructura Mexico, is also preparing to make a proposal for the pipeline stake, the people said.

At least three other suitors are exploring bids, they said.

“We are in the process of seeking passive investors to take a minority stake in our Mexico natural gas pipelines business,” Mark Cooper, a spokesman for TransCanada, said Monday.

“We will not be providing any further updates or responding to speculation until a deal is announced.”

Representatives of CPPIB, Borealis, PSP and the Caisse declined to comment.

Mexico represents a unique opportunity for the Canadian pension funds, which have a long history of investing in infrastructure assets around the globe.

In addition to the Caisse’s joint venture in the country started last September, Canada Pension and Ontario Teachers’ Pension Plan teamed up with a local partner in June to make their first investment in Mexican infrastructure, a toll road operator in the country.

The Mexican government recently implemented a four-year US$411-billion plan for infrastructure investments targeting energy, transportation and other projects.

CANADIAN ENERGY PIPELINE ASSOCIATION TransCanada Corp.’s Mexican Pipeline business is drawing a lot of attention from would-be investors, particularly those in the Canadian pension fund sector, who anonymous sources say are hoping to secure a minority stake.