From rapid transit to residential real estate, a busy week for Canadian pension plan investors

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Copyright : Georgy Kopytin // 123RF CDPQ Infra, a subsidiary of the Caisse de dépôt et placement du Québec, has concluded a work optimization agreement with NouvLR, the consortium building the Réseau express métropolitain, a rapid transit system underway in the greater Montreal area.

The agreement is a response to challenges identified during the first 18 months of the project and reinforces the project’s delivery schedule, while adjusting certain aspects of the work, according to a press release. Of note, the project’s budget is rising by 3.6 per cent, or $230 million, coming to a total construction cost of $6.5 billion and maintaining an eight to nine per cent return range.

In other investment news, Knowlton Development Corp., a network of cosmetics manufacturers and formulators owned in part by the Caisse, is teaming up with HCT Group, a cosmetics-focused logistics, engineering and design firm to create a one-stop-shop to provide end-to-end solutions for the beauty and personal care industry.

Both companies will maintain their current president and chief executive officers, but the definitive agreement will allow them to provide customers with more manufacturing and packaging options.

The Caisse acquired Knowlton Development in December 2018, alongside Cornell Capital, Investissement Québec and HarbourVest Partners. Since the purchase, Knowlton has acquired three additional properties with the aim of expanding its platform and technological capabilities.

“As a longstanding partner of [Knowlton], we are pleased to support this Quebec-based company as it continues to grow into a global leader in the industry,” said Charles Émond, executive vice-president for Quebec, private equity and strategic planning, at the Caisse, in a press release. “This transaction strongly positions [Knowlton] as it executes on its acquisition and diversification strategy.”

In further news, the Caisse’s real estate investment arm Ivanhoé Cambridge is the first real estate organization to issue an unsecured green bond financing in Canada. It’s releasing a $300 million aggregate principal amount of senior unsecured green bonds with a maturation date of Dec. 12, 2024.

The green bond offering will fund initiatives that fall under the firm’s green bond framework, which Sustainalytics has independently reviewed to confirm accordance with the International Capital Market Association’s Green Bond Principles for 2018.

“This initiative is perfectly aligned with our [corporate social responsibility] vision and our desire to find innovative ways to finance our activities in a sustainable way for generations to come,” said Simon Lauzier, chief financial and business performance officer, at Ivanhoé Cambridge, in a press release. “Establishing a Green Bond Framework allowed us to be the first real estate corporation to issue unsecured green bonds in Canada, which in turn will help the industry continue its evolution towards offering more green investment opportunities.”

And two other large pension plan investors have closed a major real estate deal. The Ontario Teachers’ Pension Plan’s Cadillac Fairview and the Investment Management Corp. of Ontario joined Lincoln Residential in making $800 million in commitments to a U.S. multi-family real estate fund.

So far, the partnership has started developing two projects: a 254-unit in Boston, MA and a 374-unit community in Fort Lauderdale, FL.

“Building strong partnerships is central to the thesis of our strategy,” said Duncan Osborne, executive vice-president of investments at Cadillac Fairview, in a press release. “We are thrilled to grow our business with a world-class partner like Lincoln Residential and have our existing partner, IMCO, invest alongside us in this exciting opportunity.”

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