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Impulsora del Desarrollo y el Empleo en América Latina, S.A.B. de C.V. (IDEAL), Canada Pension Plan Investment Board (CPPIB) and Ontario Teachers' Pension Plan (OTTP) have entered into a definitive agreement to establish a new partnership (Newco) in which IDEAL will retain a 51% ownership while CPPIB and OTTP will collectively own the remaining 49%.
Under the terms of the agreement, IDEAL will contribute its 99% equity interest in Autopista Arco Norte, S.A. de C.V., the concessionaire of the Arco Norte toll road, to Newco; while CPPIB and Ontario Teachers' together will commit an equity investment of MXN19.4 billion (US$1 billion) in exchange for shares representing 49% of the capital stock of Newco. CPPIB will own a 29% ownership interest in Newco and OTTP will own a 20% stake.
Arco Norte is one of the largest federal toll road concessions in Mexico and still has a long remaining concession length of more than 30 years. It is a 223-kilometre toll road bypass that surrounds Mexico City in the north, northeast, and northwest region to connect the states of Mexico, Puebla, Hidalgo and Queretaro, while providing a critical link with major trade corridors.
IDEAL, CPPIB and OTTP are committed to the responsible, long-term ownership and development of Arco Norte and will leverage on this partnership to continue investing in the infrastructure sector in Mexico.
Alejandro Aboumrad, CEO of IDEAL, said:
"This strategic partnership represents an exciting opportunity for IDEAL's continued growth and investing in infrastructure development in Mexico. CPPIB and Ontario Teachers' are world class partners and we look forward to expanding our partnership in the near future."
Cressida Hogg, Managing Director and Head of Infrastructure, CPPIB, said:
"Arco Norte represents our first infrastructure investment in Mexico and enables us to invest in an established, modern toll road of significant size alongside IDEAL and Ontario Teachers. This investment fits well with CPPIB's strategy to invest in core infrastructure assets with long-term, stable cash flows in key global markets. We look forward to building our relationship with the partners."
Andrew Claerhout, Senior Vice-President, Infrastructure & Natural Resources at OTTP, said:
"We are thrilled to partner with IDEAL and CPPIB on a critical transportation asset in Mexico. This investment provides a strong foundation for continued growth of our infrastructure portfolio in Mexico and the rest of Latin America. Arco Norte is an attractive asset with long-term growth potential that will provide income to pay pensions."
Credit Suisse Securities LLC acted as exclusive financial advisor to IDEAL, and Macquarie Capital Inc. acted as exclusive financial advisor to CPPIB and OTTP.