IDEAL, CPP Investments and Ontario Teachers' expand Mexican infrastructure partnership

April 16, 2020

Torys represented CPP Investments and Ontario Teachers’ with a team that included Jared Fontaine, Michael Horwitz, Michael Portner Gartke, Kevin Chan and Shane Thomas (corporate/M&A).

On April 16, 2020, CPP Investments and Ontario Teachers' Pension Plan ("Ontario Teachers") announced the completion of the tender offer period to purchase 40% of the shares of Impulsora del Desarrollo y el Empleo en América Latina, S.A.B. de C.V. ("IDEAL"). This step concludes the shareholders' acceptance of the offer of affiliates of Ontario Teachers' and CPP Investments to purchase the shares of IDEAL.

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, CPP Investments and Ontario Teachers' are already partners in the Arco Norte and Pacifico Sur toll roads.

The acquisition follows a tender offer in the Mexican stock exchange on March 18 for shares in IDEAL at MXN$43.96 per share. CPP Investments will own a 23.7% interest in IDEAL alongside a 16.3% stake owned by Ontario Teachers'. The current majority owners of IDEAL's outstanding shares will continue to hold a majority shareholding in the company.

As part of the arrangement, a subsidiary of IDEAL will form an infrastructure investment trust known locally in Mexico as a FIBRA-E (Fideicomiso de Inversión en Energía e Infraestructura). This FIBRA-E is subject to certain transaction steps and filings that are yet to be finalized. The FIBRA-E will subsequently be funded by IDEAL, CPP Investments and Ontario Teachers', through certain affiliates. The FIBRA-E structure was introduced in Mexico in 2015 to encourage private-sector investment in 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. Following the completion of this funding, a secondary offering led by CPP Investments and Ontario Teachers', through certain affiliates, will reduce their ownership to minority positions, while also introducing other investors.

IDEAL engages in the development, promotion, operation and administration of infrastructure projects in Mexico and Latin America. IDEAL is one of the largest infrastructure companies in Latin America, with concessions in different sectors, including toll roads, water, energy, social infrastructure and logistics terminals.

CPP Investments is a professional investment management organization that invests the funds not needed by the Canada Pension Plan to pay current benefits in the best interests of contributors and beneficiaries. CPP Investments invests in public equities, private equities, real estate, infrastructure and fixed income instruments.

Ontario Teachers' is Canada's largest single-profession pension plan. The defined-benefit plan, which is fully funded, invests and administers the pensions of the province of Ontario's active and retired teachers.

Further information can be found on Canada Newswire’s website.

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