Canada Infrastructure Bank to Attract Private Investors, Aims to Consolidate Renovation Loans
OTTAWA (Reuters) – The Canada Infrastructure Bank (BIC) says there will be private investors for its projects and is in talks with private and public landowners over funding for building renovations as part of the government’s plan to foster a green economic recovery.
“We actually know that we will be able to attract private capital (because) (…) we have embarked on a comprehensive consultation program,” John Casola, CIB’s chief investment officer, told Reuters.
CIB has been in talks with Canadian investment funds, institutional investors, private equity firms and domestic and foreign banks for months, he said, without naming names.
Earlier this month, Prime Minister Justin Trudeau launched a three-year C $ 10 billion ($ 7.6 billion) infrastructure plan that will be managed by CIB. Trudeau said it would create jobs and help Canada emerge from the economic slump caused by COVID-19.
Trudeau’s Liberal government founded CIB in 2017 in an attempt to mobilize some C $ 35 billion in public funds by combining them with private capital to build income-generating infrastructure, but it has so far struggled to attract external funds.
In April, Trudeau called on Michael Sabia, the former head of one of Canada’s largest pension funds, to chair the CIB board. The government’s new plan sets aside money for clean energy, broadband, zero-emission buses and building renovations.
CIB has earmarked some C $ 2 billion to help private and public property owners modernize their buildings, and Casola provided insight into how it will aim to generate income.
Real estate investment trusts (REITs), other business owners and public landowners have expressed “great interest” in taking out a low-interest loan for a significant portion of the necessary improvements, Casola said.
This renovation program, which will combine with a pledged cash injection for residential properties later this year, is the cornerstone of Trudeau’s plan to “build back better” after the pandemic, by reducing carbon emissions and creating more energy. new jobs.
“We expect a high volume of transactions,” he said. “They will be structured so that CIB’s debt is recoverable through the estimated operational savings resulting from the upgrade of this equipment. “
The estimated energy savings will repay the loans, and if these savings are less than the estimates, the CIB will assume the risk. After having reached a critical mass of 200 to 300 million Canadian dollars in loans, CIB will group them into pools that will be syndicated or sold to the private sector.
“For the vast majority of trade deals, private as opposed to public, we will fund most of (the upgrade) ourselves without any outside private capital at close, but these will be structured in such a way that we aggregate them, ”he said.
Before loan pools can be commercialized, the CIB will have to “draw up a balance sheet (showing) that the operating savings are really there,” and that could take between three and five years, Casola said.
($ 1 = 1.3160 Canadian dollars)
Reporting by Steve Scherer; Editing by Lisa Shumaker