DEALTALK-CPPIB sees top toll-road prize in Australia bid

* Intoll owns 30 percent of Ontario’s Highway 407

* Spain’s Ferrovial selling 10 pct stake

* CPPIB is one of the world’s top private equity investors

By Pav Jordan

TORONTO, July 15 (BestGrowthStock) – CPPIB’s multibillion-dollar
bid for Australia’s Intoll this week took it half way around
the world and back to Toronto to take a run at one of the
world’s top toll road prizes: the Highway 407 expressway north
of Canada’s richest, biggest city.

The Canada Pension Plan Investment Board, or CPPIB, the
country’s second-biggest pension manager, offered to pay C$3.5
billion ($3.4 billion) for Sydney-based Intoll Group (ITO.AX: ),
driving up its shares by 30 percent.

In its friendly offer to Intoll, dated July 15 in
Australia, CPPIB states that the company’s 30 percent stake in
Highway 407 comprises the substantial majority of Intoll’s
asset value.

According to Andre Bourbonnais, CPPIB’s senior
vice-president for private investments, the 407 is one of the
world’s top assets in its class and fits the pension
administrator’s strategy to invest in assets with stable,
long-term revenue streams.

“The 407 is certainly one of the most attractive assets in
that space and happens to be in Canada, and we are very happy
about that,” Bourbonnais told Reuters in an interview.

“It fits squarely in our infrastructure strategy. It is a
really core asset with long-term, predictable cash flow. A
highly generative cash asset that we can own for a very long
period of time.”

CPPIB was one of the world’s top private equity investors
over the past year, and was a partner in the largest leveraged
buyout of 2009 — the $4 billion acquisition of U.S.-based IMS
Health Inc, a prescription drug sales data provider, which it
bought together with U.S. private equity firm TPG [TPG.UL].

Infrastructure has been a key feature of global dealmaking
in the wake of the global economic crisis.

Aecon Group Inc (ARE.TO: ), Canada’s biggest publicly traded
construction company, said on Thursday it would sell its 25
percent stake in the Cross Israel Highway concessionaire,
Derech Eretz Highways (1997) Ltd, for C$77.8 million to Israel
Infrastructure Management.

CPPIB has indicated it expects to continue to be a big
investor in private equity as it eyes assets under management
that are expected to double in the next decade, from C$127
billion today.

The Canadian fund manager likes assets that are easy to
manage and, like toll roads and other infrastructure assets,
are inflation proof. It also owns electricity assets in Chile
and the United States and water distribution assets in the
United Kingdom.

“There are certain markets that are certainly more
favorable to private ownership of infrastructure assets.
Australia is one of them, UK is one of them and I think Canada
is certainly moving in that direction,” said Bourbonnais.

He said the CPPIB did top-down and bottom-up analysis
before setting its sights on the 407 prize, analyzing
everything from fundamental macroeconomic trends and population
growth to Toronto traffic patterns.

“And so the 407 is very interesting from that point of
view,” he said.

If it succeeds in acquiring Intoll, CPPIB will have a shot
at a further 10 percent stake in the highway being shopped
around by Ferrovial (FER1.MC: ), a Spanish company accepting
offers from July 12-20.

A CPPIB spokeswoman said the pension fund administrator was
not commenting on the Ferrovial stake.

Acquiring Intoll would also give it ownership of
Australia’s M7 motorway in Sydney.

Bourbonnais declined to speculate on what other assets
CPPIB might go after in the future, but listed ports and
airports as fitting its strategy, especially ones in stable
political regimes.

Separately, CPPIB confirmed that its vice-president head of
infrastructure Graeme Bevins was leaving to relocate to his
homeland of Australia, where he will take up a post with Alinda
Capital Partners, a U.S.-based infrastructure fund.

CPPIB said Bevins will be replaced, for the interim, by
Alain Carrier, managing director for Europe private

($1=$1.04 Canadian)
(Additional reporting by Gregory Roumeliotis; editing by Rob

DEALTALK-CPPIB sees top toll-road prize in Australia bid