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A single line in Prime Minister Mark Carney’s first budget in November resonated with one of Australia’s largest infrastructure investors. It said the Canadian government was considering selling the country’s major airports, a signal IFM Investors Pty Ltd. took to mean the door was swinging open to billions of dollars of investible assets for major institutional investors.
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“The fact that Ottawa is looking seriously at how long-term capital can play a role in major infrastructure is a positive signal,” Gian-Carlo Peressutti, an executive director at IFM, said Thursday.
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Next week, the $287.3-billion global asset manager owned by Australia’s largest pension funds will lead that country’s delegation at the inaugural Canada Investment Summit following an invitation by Carney himself.
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Executives at the fund have said they are prepared to invest $10 billion in Canada over the next decade if conditions are right. And that goes well beyond airports.
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“The government is clearly focused on getting major projects built and removing some of the barriers that have held investment back, so the direction is encouraging,” Peressutti said.
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“The next test is turning that into a steady flow of projects that investors can actually put capital into.”
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It’s a prospect that is drawing global investors from across Asia, Europe, the Middle East and the United States to the invitation-only summit in Toronto Monday. Among the 250 invited guests from more than 25 nations expected to attend are BlackRock Inc. chairman Larry Fink, Barclays PLC chief executive C.S. Venkatakrishnan and senior managers of pension funds and sovereign wealth giants from Saudi Arabia’s Public Investment Fund (PIF) to Norway’s Norges Bank Investment Management.
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Carney’s goal is to attract major investments from the crowd to fund his nation-building agenda to strengthen Canada’s economy and reduce dependence on the U.S. But the big question hanging over the summit is whether the conditions for investing have changed enough in a country where major projects have often lagged and those that lack scale and do no sufficiently manage risk have at times scared private capital away.
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Global investors ‘underweight’
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Raman Aylur Subramanian, managing director and research lead at New York-based data analytics and index company MSCI, said there is a strong case for global investors to boost their investments in Canada, based solely on the size of Canada’s economy.
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A reallocation to align private assets alone with Canada’s share of GDP among developed nations would amount to US$200 billion in new investment, he said, citing research his firm published this month that showed global investors are “underweight” in Canada to the tune of half a trillion dollars overall.
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Subramanian also noted there is a growing recognition that global investors are heavily exposed to the United States across asset classes, with that exposure far outstripping the U.S. share of developed-country GDP. Uncertainty from the trade war has only deepened scrutiny of that imbalance.