CPPIB, Ontario Teachers to acquire individual stakes in Impulsora del Desarrollo y el Empleo en América Latina

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Canada Pension Plan Investment Board (CPPIB) and Ontario Teachers’ Pension Plan (Ontario Teachers) have entered into a definitive agreement to acquire a stake in Impulsora del Desarrollo y el Empleo en América Latina, S.A.B. de C.V. (IDEAL) to further invest in key infrastructure projects throughout Mexico.

IDEAL’s portfolio includes 18 infrastructure concessions in Mexico (13 toll roads, three logistics terminals, and two wastewater treatment plants), as well as an electronic toll collection service business and an operations business. IDEAL, Ontario Teachers’ and CPPIB are already partners in the Arco Norte and Pacifico Sur toll roads.

Under the terms of the agreement, CPPIB and Ontario Teachers’ have committed to launch a tender offer in the Mexican stock exchange for shares in IDEAL, subject to the fulfillment of certain conditions, at MXN43.96 (US$2.25) per share. If successful, CPPIB will acquire a 23.7% interest in IDEAL alongside a 16.3% stake by Ontario Teachers’. The current majority owners of IDEAL’s outstanding shares will maintain a majority shareholding in the company.

As part of the arrangement, an infrastructure investment trust, known locally in Mexico as a FIBRA-E (Fideicomiso de Inversión en Energía e Infraestructura), will be formed by a subsidiary of IDEAL, and subsequently funded by certain shareholders of IDEAL, CPPIB and Ontario Teachers’. The FIBRA-E structure was introduced in Mexico in 2015 to encourage private-sector investment in energy and infrastructure projects.

The FIBRA-E will be managed by a subsidiary of IDEAL and purchase partial stakes in four of IDEAL’s toll roads: Arco Norte, Chamapa - La Venta, Toluca Bypass and Tijuana - Tecate. After the FIBRA-E is formed, a secondary offering led by CPPIB and Ontario Teachers’ will occur, which will reduce their ownership to small minority positions while also introducing other investors.

The transaction is subject to customary closing conditions, including by certain competition and regulatory authorities.

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