Maple 8 CEOs Tell Ottawa No Tricks, Just Infrastructure Treats
 James Bradshaw of the Globe and Mail reports pension fund CEOs renew calls for Ottawa to sell key infrastructure assets:
James Bradshaw of the Globe and Mail reports pension fund CEOs renew calls for Ottawa to sell key infrastructure assets:The chief executives of Canada’s major pension funds are reviving a years-long campaign to persuade Ottawa and the provinces to sell key infrastructure such as airports, days before the release of a federal budget geared toward building up Canada’s sovereignty.
For years, Canada’s pension funds have lamented what they say is a lack of big-ticket infrastructure opportunities in Canada, as governments at all levels have held on to assets that would draw institutional investors’ interest if put up for auction.
The message to finance ministers about how to create the fiscal capacity for new investments in Canada is clear: “Look at your balance sheet and sell assets,” Gordon Fyfe, CEO of British Columbia Investment Management Corp., said at an event in Toronto held by the Economic Club of Canada on Thursday.
Mr. Fyfe cited airports, hydroelectric power and transportation assets such as highways as the sort of opportunities that grab attention from BCI, which manages $295-billion of assets, and other large funds.
That’s because they are existing assets with cash flows from stable contracts that deliver the steady but unspectacular returns that could help pay pensions.
“Especially with the deficits governments are running today, why wouldn’t they sell some of those assets to balance sheets like ours where we can hold those assets, and finance them?” Mr. Fyfe said. “They’re still in Canada. And I promise you we would compete like hell with each other, so the governments would get a very good price.”
The government could then use the proceeds from those sales to seed new projects developed from scratch, as outlined in Ottawa’s push to fast-track major nation-building projects, which often carry “much higher risk than a pension fund needs,” he said.
Deborah Orida, the CEO of the $300-billion Public Sector Pension Investment Board, said that PSP Investments owns and operates seven airports in places such as Germany, Scotland and Greece through its AviAlliance subsidiary.
“We have expertise. We’d love to apply it to our country,” she said.
The government has shown “some” interest in that pitch, she added. “We’ll see.”
All four CEOs who spoke at Thursday’s event – Ms. Orida, Mr. Fyfe, Ontario Municipal Employees Retirement System (OMERS) CEO Blake Hutcheson and Healthcare of Ontario Pension Plan (HOOPP) CEO Annesley Wallace – said they are hopeful they will be able to invest more money in Canada.
“There’s no issue with that at all, but don’t ask us to buy more public equities,” Mr. Fyfe said.
Canada’s major pension funds, which collectively manage $2.5-trillion of capital, have come under pressure from senior business leaders and finance ministers to invest more in Canada. The eight largest pension fund managers each have between 12 per cent and 50 per cent of their total assets invested domestically, according to the latest company filings.
Mr. Hutcheson of OMERS said that criticism ignores the fact that “it has been a supply problem, not a demand problem.”
“The biggest recognition the government has to make is, it’s okay for a Canadian pension fund to own a bridge or a port or an airport,” he said at Thursday’s event.
Ms. Orida and Mr. Fyfe also sounded a warning about the potential consequences for the funds’ members if Ottawa were to encroach on their independence to direct more investment to Canada.
Asked what keeps him up at night, Mr. Fyfe replied: “Interference.”
As government deficits swell, governments at all levels have turned their gaze to the vast pools of capital that pension funds manage as a potential catalyst to help spur growth and productivity with new business investment.
But “those pools of capital are there to support retirement, not government policy,” Mr. Fyfe said.
Ms. Orida also said that “losing that independence, I think, is what keeps me up at night.”
She cited the $15-billion Canada Growth Fund, which Ottawa entrusted to PSP Investments to manage in 2023, as an example of an arrangement that has worked. At its launch, pension experts raised questions about the CGF’s governance and independence.
But the fund has since committed $4.75-billion to new projects, and Ms. Orida said it shows there are ways pension funds can “help the country without having it forced upon us.”
Catherine McIntyre of The Logic also reports the Maple 8 want to buy Canadian airports and roads:
You might notice not much coverage of HOOPP's new CEO Annesley Wallace and her comments on the panel so I will embed this article from Bryan McGovern of Benefits Canada from a month ago where she stated HOOPP willing and ready to invest in Canadian infrastructure needs:TORONTO — The leaders of some of Canada’s biggest pension funds say governments should consider selling them public assets, like airports and roads, to bolster levels of domestic investment.
“There are a lot of great assets on the balance sheets of governments at every level,” said Gordon Fyfe, CEO of the British Columbia Investment Management Corporation (BCI), during a panel discussion at the Economic Club of Canada in Toronto Thursday morning. “Especially with the deficits they’re running, why wouldn’t they sell some of those assets to balance sheets like ours where we can hold those assets and finance them?” Fyfe said on stage. He added that pensions would gladly invest in Canadian airports, transportation and energy assets if they were available to buy.
OMERS CEO Blake Hutcheson agreed that Canadian governments need a “mind shift” about keeping big infrastructure assets private. He said part of their hesitation is that the low rate of borrowing for governments can make it cheaper for them, rather than pensions, to finance projects. “The biggest recognition the government has to make is that it is okay for a Canadian pension plan to own a bridge or a port,” said Hutcheson.
PSP Investments chief executive Deborah Orida said Canada’s big pensions have plenty of experience investing globally in major public assets. “We have an airports platform. We own seven airports globally,” said Orida. “We have expertise and we’d love to apply it to our country.”
Canada’s big pensions have significant infrastructure holdings globally. Ontario Teachers’ Pension Plan has held minority stakes in airports in Sydney, Brussels and Copenhagen. La Caisse bought a nearly 30 per cent stake in the Port of Brisbane after the Australian government privatized the asset in 2010. And the Canada Pension Plan Investment Board bought a 49.99 per cent stake in five Chilean toll roads in 2012 for $1.14 billion.
Pressure for the Maple 8 to invest more in Canada has been ramping up for years, peaking with the wave of Buy Canadian sentiment triggered by U.S. President Donald Trump’s trade war.
Earlier this month, federal Industry Minister Mélanie Joly implored the country’s big pension funds to invest more in Canada, as the government seeks $500 billion in new financing to boost the economy and lower Canada’s reliance on the U.S.
Hutcheson said the political environment won’t change how OMERS invests in the short term. Over the medium term, however, he said Canada could benefit from the geopolitical and market shifts, including by attracting more pension investments. “We believe in this country,” he said. “We’re looking for opportunities to do more here.”
Fyfe said BCI would love to have more Canadian assets, but that investing in big new developments comes with a lot of risk that pension funds—with their responsibility to generate steady returns for retirees—aren’t always comfortable with. HOOPP CEO Annesley Wallace said HOOPP is keen to invest in new Canadian infrastructure projects if the government does enough to minimize those risks by, for example, helping facilitate the development and construction of the projects.
Many pension leaders have historically resisted calls for domestic investment targets, emphasizing their mandates to maximize returns for their members in the long term. More recently, leaders have been warming to the idea of boosting their Canadian portfolios as the federal government signals greater support for assets that appeal to them. On the panel Thursday, however, Orida and Fyfe both emphasized that pensions need to remain free to invest without government influence. “Losing that independence is what keeps me up at night,” said Orida.
Alright, so what are my thoughts?The chief executive officer at the Healthcare of Ontario Pension Plan delivered one of the clearest signals to the Canadian market that the Maple 8 pension fund is open for business when it comes to infrastructure projects in the country.
“I think Canada needs more infrastructure projects,” said Annesley Wallace, chief executive officer at the investment organization, during a gathering for the Canadian Club Toronto last week. “There’s a real opportunity for the Canadian pension plans, including the HOOPP, to lean into those opportunities. Historically, we haven’t seen as much of those opportunities, particularly with the national level commitment, as we would have liked,”
She noted the investment organization is closely monitoring forthcoming investment opportunities, including a lineup of nation-building projects outlined by Prime Minister Mark Carney.
“My view is for sure to the extent that there are commercial models that are created around these projects and with government support, there will be lots of capital that comes to the table for investing with great success.”
Investment organizations like the HOOPP will require more clarity to navigate the investment model for these projects, she adds. The feds recently unveiled a new arm, the Major Projects Office, to fast-track projects through regulatory assessments and engage financing structures with provinces, territories, Indigenous Peoples and private investors.
“My hope is that the Canadian pension plans can be a source of competitive advantage for the country, . . . we have capital that we would love to invest in Canada to help that economic engine and help improve productivity going forward but also because Canada needs to be competitive in order to attract, not just Canadian pension plan capital, but global capital.”
Wallace sees the HOOPP using a total portfolio approach that prevents isolating segments, an approach that makes the plan sponsor’s investment decisions stronger and more resilient. “The world is shifting and [we] must continue to shift with it.”
Wallace was named CEO at the HOOPP in April and since then, she has learned more about the intricacies of the health-care sector. She was previously executive vice-president of strategy and corporate development and president of power and energy solutions at TC Energy Corp. and also invested in infrastructure projects at the Ontario Municipal Employees’ Retirement System.
I didn't participate, wasn't invited and junior was sick today (joys of daycare) so I spent my day looking after him and checking out markets when he napped.
I did try to find this panel discussion because it's four CEOs of major Canadian pension funds sharing their insights and they all know each other well.
Why wasn't I invited to moderate this panel discussion? Why did they choose fellow Greek-Canadian Vassy Kapelos and not yours truly?
Well, it's obvious, she's a lot smarter, younger, prettier and more pleasant to listen to and she really knows Canadian politics better than anyone. I'm sure she did a great job and asked the right questions.
I'm old, cynical, crusty and make some pension aficionados really nervous for some strange reason (I'm always nice and polite even when they're blowing smoke my way).
Anyways, some quick thoughts on what was said today just from reading the articles above.
Basically the CEOs spelled it out in black and white for Ottawa. No tricks, just infrastructure treats.
They want to invest in major Canadian brownfield infrastructure assets where they can put huge capital to work and get assets that provide steady inflation-adjusted cash flows for decades to come.
And Gordon Fyfe was crystal clear, they're not interested in investing more in Canadian equities (public or private), they want to invest in airports, ports, toll roads, electricity transmission, hydroelectric power, digital infrastructure, basically the backbone of the economy.
He rightly notes that if the federal government does this right, it can reduce its debt by fully or partially privatizing these assets and have them managed professionally through a private-public partnership.
Blake Hutcheson notes that the government needs a "mind shift" to do privatize these assets and recognize that pensions can own these assets over the long run.
Deb Orida mentioned PSP Investments' international airport assets managed by their wholly owned subsidiary Avi Alliance and she said the government is warming up to selling stakes in major airports.
Annesley Wallace has already noted that governments need to create the right conditions to attract HOOPP and other domestic and international pools of capital and they stand ready to invest when those conditions are realized.
On independence, both Gordon Fyfe and Deb Orida said that government interference keeps them up at night.
That whole AIMCo purge sent a jolt through all the Maple 8 funds. In the back of every Maple 8 CEO's mind is can this happen to us? (it can but it's not likely)
Also, independence assures a very generous compensation framework allowing them to attract and retain top talent across public and private markets to internalize asset management (and enjoy huge bonuses if they deliver solid long term returns).
Deb cited the Canada Growth Fund as a successful venture between government and a major pension fund where they can “help the country without having it forced upon us.”
Last week I discussed how the Canada Growth Fund is investing in a major greenfield on four small modular reactors (SMRs) project in the Darlington New Nuclear Project (DNNP) in Bowmanville, Ontario. Read my comment here.
To my surprise, a few experts reached me after ward to tell me they were skeptical this new technology would work and that this project will provide reliable energy to Ontario for decades to come.
Moreover, they told me they think costs will balloon and this project will severely strain Ontario's debt profile.
I hope these skeptics are proven wrong but as I stated, there are always risks with greenfield infrastructure projects which is why pension funds prefer brownfield ones with known revenues (not always, La Caisse invested US$2.3 billion in the UK's Sizewell C nuclear plant, getting the right terms early on; read my comment here).
Alright, let me end it there.
If this event is posted online, I will embed it in this post.
Below, take the time to listen to HOOPP's CEO Annesley Wallace from a month ago at the Canadian Club Toronto on the critical role HOOPP plays in securing the financial futures of its members (I covered it in more detail here).

















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