Canadian pension funds acquire Chicago toll road for $2.8 billion
Three Canadian pension funds announced on Friday that they will be acquiring the company holding the rights to run and operate the Chicago Skyway toll road for $US2.8 billion.
The three pension funds paid US$512 million each in equity, with the rest funded by debt.
The Chicago Skyway Bridge is a 7.8-mile toll road built in 1958 to connect the Dan Ryan Expressway to the Indiana Toll Road. It is the only highway in the state of Illinois not operated by the state Toll Highway Authority.
The Canada Pension Plan Investment Board (CPPIB), Ontario Municipal Employees Retirement System (OMERS) and Ontario Teachers’ Pension Plan (OTPP) will each own a one-third interest in Skyway Concession Co LLC, which holds an agreement to run the road until 2104.
Skyway Concession, backed by Spanish transportation infrastructure group Cintra SA and Macquarie Group, acquired rights to run the toll road in January 2005 for $1.83 billion. The road was previously run by the City of Chicago.
“Skyway represents a rare opportunity for us to invest in a mature and significant toll road of this size in the U.S.,” Cressida Hogg, Canada Pension’s head of infrastructure, said in a statement Friday. “This investment fits well with CPPIB’s strategy to invest in core infrastructure assets with long-term, stable cash flows in key global markets.”
“Our investment in Skyway also fits with our goal of growing our assets under management in the North American infrastructure space,” Ralph Berg, global head of infrastructure at OMERS Private Markets, said in a statement.
The three pension funds manage huge amounts of capital. Over the past few years they have become significant investors in infrastructure assets outside Canada. Infrastructure typically offers funds stable and consistent returns.
The largest of the three funds is Canada Pension Plan Investment Board. As of the end of September the group managed net assets valued at C$272.9 billion ($205 billion) and invested about C$19.5 billion of that in infrastructure.
The sale still requires approval from the Chicago government.