Plenary and Cintra pitch to Canadian Pension Funds

21 July 2017 - 12:00 am UTC

Netflow, the consortium made up of Plenary Group and Cintra, is trying to entice Canadian pension funds to back its bid for the WestConnex Motorway. Sources said Plenary and Cintra executives had met with Ontario Teachers’ Pension Plan, La Caisse de Depot et Placement du Quebec (CDPQ) and Borealis Infrastructure, selling them the merits of the 33km Sydney motorway project. 

Sources said Plenary and Cintra executives had met with Ontario Teachers’ Pension Plan, La Caisse de Depot et Placement du Quebec (CDPQ) and Borealis Infrastructure, selling them the merits of the 33km Sydney motorway project. 

CDPQ is a 20% shareholder in Plenary and seven of its PPP projects, and could invest through the Australian-based infrastructure manager or alongside it as a direct investor, said one of the sources. 

While New South Wales has not yet revealed whether half or all of the AUD 16.8bn (USD 13.3bn) three-stage project will be on offer when the sale starts in October, the sources said either way Netflow is likely to require an equity injection to win the auction. 

NSW Treasury is sounding out investors to see if there is enough adequately-funded buyers to buy the Sydney Motorways Corporation outright, as is the state’s preference. It would need at least two consortia with as much as AUD 8bn equity apiece for the auction to have enough competitive tension. 

One of the sources doubted there is enough interested equity for two fully-funded AUD 16bn-plus bids and that the state would attract more credible competitors if it just sold half of the project. 

Canada Pension Plan Investment Board is also circling the auction, but is instead thought to be staying close to rival bidder Transurban – given the pair’s history in the Westlink M7 and NorthConnex motorways alongside AustralianSuper and Abu Dhabi Investment Authority, which have also been linked to discussions. 

Borealis is most closely aligned with QIC and The Future Fund, which together bought Port of Melbourne from the Victorian government last year for AUD 9.7bn. 

Netflow has yet to appoint an adviser, but is currently hearing pitches. Sources said discussions about IFM Investors joining Netflow ended in the two parties deciding not to form a consortium. 

Transurban has helped itself to three investment banks with the strongest credentials in toll roads including Macquarie Capital, UBS and Morgan Stanley. 

As reported, APG and various Middle Eastern sovereign wealth funds are also hearing pitches from Transurban and Netflow. Hastings Funds Management is also considering a tilt alongside its investment partners from its TransGrid network business but a source said the group is still weighing its options.  

Goldman Sachs and Ashurst are running the sale of WestConnex on behalf of the NSW government. 

The incomplete motorway is to have three stages when completed in 2023, the first part of which is nearing completion. Reference designs for the third stage, a tunnel linking the expanded M4 and M5 motorways, has yet to be finalised. 

The buyer of the motorway will oversee the building of the second and third stages.