National Post (Latest Edition)

INFRASTRUC­TURE BANK LAUNCHES GROWTH PLAN $ 10B

GETS MORE CREATIVE WITH INV ESTMENTS IN CLEAN POWER, BUILDING RETROFITS

- Geoff Zochodne

TORONTO • The Canada Infrastruc­ture Bank will get more creative in order to attract additional private- sector and institutio­nal investors to its projects, its chair said, as the Crown corporatio­n has been tapped to deploy billions as part of the federal government’s COVID-19 economic recovery efforts.

Prime Minister Justin Trudeau on Thursday announced a $ 10- billion “growth plan” for the bank, which is expected to create approximat­ely 60,000 jobs via investment­s in clean- power projects and energy- efficient building retrofits, among other things.

The bank was created in 2017 and given a budget of $ 35 billion in federal funding to invest in “revenue-generating” infrastruc­ture projects. Those investment­s were also supposed to help draw pension funds and other outside investors to the projects.

However, the federal lender has so far found only nine projects to back, including one that earmarks up to $ 2 billion to help expand Ontario’s GO Transit service. The infrastruc­ture bank has also had some organizati­onal hiccups, one of which was overhaulin­g its senior leadership back in April.

To aid the economic recovery from the coronaviru­s pandemic, which continues to sicken Canadians and drag down the country’s economy, the Trudeau government said it is aiming to create more than one million jobs, and the infrastruc­ture bank’s three- year growth plan will now form part of that effort.

“I think as we at the bank continue and become even more creative about how to structure projects, about the nature of those projects, I don’t think the issue will be our ability to attract capital,” said Michael Sabia, the chair of the bank and the former chief executive of the Caisse de dépôt et placement du Québec pension fund, at a press conference on Thursday.

“I think one of the issues that we have had is that we have not thought sufficient­ly creatively about bringing in outside capital and the power that that can bring in terms of building the kinds of infrastruc­ture that Canada needs to prosper.”

Details of the bank’s growth plan suggest it will indeed get a bit inventive.

The $ 10 billion needed to fund the plan will come out of the lender’s pre- existing $ 35- billion budget, and includes $ 2 billion for largescale retrofitti­ng of buildings to improve their energy efficiency.

Private- sector firms have been wary of such investment­s in the past, according to the bank, because of uncertaint­y about the savings they generate. Now, though, the bank is aiming to finance upfront capital costs in an effort to help prove the projects’ worth.

The lender is also creating “a mainstream, broadly marketed debt product to attract new market participan­ts beyond the existing large equipment manufactur­ers and energy services companies present in the current limited market.”

Likewise, the bank said clean- power projects often run into delays or face financing obstacles, so it will offer cheap and long-term capital tied to revenue streams that are usually not enough to entice traditiona­l investors.

Those investment­s, the bank said, will be structured “to increase the use of private- sector capital, reduce the weighted average cost of capital, provide certainty on long- term debt and equity returns, and transfer more constructi­on and operations risk to the private sector.”

Investors have become more climate- conscious and focused on environmen­tal, social and corporate governance factors in recent years. The renewable energy industry is also convinced that the infrastruc­ture bank’s commitment­s could drive some of those investors towards Canada.

“Through the provision of low- cost and long- term capital, the Canada Infrastruc­ture Bank can facilitate and accelerate the deployment of new wind energy, solar energy, energy storage and electricit­y infrastruc­ture projects that will create jobs and investment in the shortterm while reducing greenhouse gas emissions today and in the future,” the Canadian Renewable Energy Associatio­n on Thursday said in a release.

Sabia, who was named the bank’s chair back in April, has a fair amount of investing clout from his time running the Caisse, Canada’s second-biggest pension fund. Returns from infrastruc­ture projects remain “highly attractive” to investors, he said, given the current investing environmen­t, which is fraught with uncertaint­y and low interest rates.

The infrastruc­ture bank expects to start investing in its growth- plan projects before 2020 is over.

“The supply of capital will be there,” Sabia said. “Our challenge is identifyin­g the projects, structurin­g the projects, structurin­g the financing in an attractive way. The capital will be there if we do that, and that’s the job of the infrastruc­ture bank.”

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 ?? / THE CANADIAN PRESS ?? Sean Kilpatrick
Chair of the Board of the Canada Infrastruc­ture Bank Michael Sabia.
/ THE CANADIAN PRESS Sean Kilpatrick Chair of the Board of the Canada Infrastruc­ture Bank Michael Sabia.

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