News Releases
January 22, 2008 – Borealis hires Top Canadian Infrastructure Dealmaker Borealis Infrastructure has hired Rick Byers, one of Canada’s most influential dealmakers in structuring public/private sector investments, as executive vice president. He joined the firm on January 21. Mr. Byers most recently served as managing director at BMO Capital Markets, which he joined in 1991. As group head of its government investment banking practice, he was responsible for public sector transactions, including infrastructure development, privatization and public/private partnerships. “Borealis plans as much as $5 billion of new infrastructure investments on a global basis in the next five years,” commented Michael Rolland, Borealis president and chief executive officer. “Rick’s expertise strengthens our 50-member team in originating, evaluating and completing transactions that will add lasting value to the $5.2 billion of infrastructure investments we currently manage for the OMERS pension fund.” Since pioneering infrastructure investing in the Canadian pension industry in 1998, Borealis has created a diversified infrastructure portfolio on behalf of OMERS. The global portfolio contains 20 different investments with an enterprise value exceeding $25 billion. “Rick has the market knowledge, transactional skills and network of relationships that will enable us to broaden our asset base to secure the pension entitlements of OMERS plan members,” Mr. Rolland added. “His expertise solidifies our leadership in Canada and will facilitate expansion into global markets in sectors such as transportation, energy, pipelines, healthcare, water treatment and social services.” Mr. Byers was a key advisor to BMO Capital Markets clients on such successful transactions as Highway 407, the Greater Toronto Airports Authority, NAV Canada, and the sale and leaseback of office properties for the federal government. Prior to joining BMO Capital Markets, he was special assistant to the Office of the Minister of Finance between 1987 and 1991 and an auditor with KPMG between 1983 and 1987. A chartered accountant, he holds a bachelor of commerce degree from the University of Toronto and an MBA from the University of Ottawa. On January 21, Borealis announced the hiring of Paul Calder as senior vice president - research and credit. Mr. Calder was previously director (senior credit analyst) of the Canadian project finance and infrastructure group at Standard & Poor’s. January 21, 2008 – Borealis hires Top Canadian Credit Risk Executive Borealis Infrastructure has recruited Paul Calder, one of Canada’s most experienced evaluators of infrastructure credit risk, as its senior vice president – research and credit. Previously a director of Canadian project finance and infrastructure at Standard & Poor’s, he joins the firm on January 14. “Paul is one of the best credit people anywhere in the infrastructure investment space,” commented Michael Rolland, Borealis president and chief executive officer. “He explains the risks associated with complicated and innovative transactions in simple and insightful terms that should help to facilitate our investment decisions. His experience and skills are a perfect fit for Borealis as we expand our global reach.” Mr. Calder will lead the global market research and credit risk assessment activities for the Borealis team. He will support the transaction teams as they originate investment prospects in sectors such as transportation, energy, pipelines, healthcare, water treatment and social services. Mr. Calder graduated from Bishop’s University, Quebec in business administration (with an emphasis on investment finance) and is a chartered financial analyst. He began his career as a financial analyst with the City of Ottawa in 1993 before joining the research and development team at Nortel Networks in 1996 for a brief period. He was portfolio manager, credit surveillance, at the Export Development Corporation prior to starting a 10-year career with Standard & Poor’s in 1997. He rose to the position of director and senior credit analyst of the Canadian project finance and infrastructure group. He was also a member of S&P’s global infrastructure practice and was involved with credit analysis, rating and criteria setting in North America, Europe, the United Kingdom, Ireland and Asia-Pacific. Mr. Calder has provided credit risk opinions for infrastructure investments and asset ownership structures as diverse as airports, highways, bridges, universities and school boards. “His due diligence and communication skills will help to deepen our relationships with a wide range of market participants from corporate executives, government officials and institutional investors to asset managers, bankers, regulators and bond insurers,” Mr. Rolland commented. “As a result, we will all better understand the risk and return expectations of infrastructure investments in what has become a highly competitive global marketplace.” Since 1998, Borealis has created a diversified infrastructure portfolio on behalf of the OMERS pension fund. The global portfolio contains 20 different investments with an enterprise value exceeding $25 billion. Borealis, which pioneered infrastructure investing in the Canadian pension industry, manages OMERS $5.2 billion equity interests in the portfolio. It is my pleasure to confirm that Michael Rolland will succeed me as President of Borealis Infrastructure when I assume my new responsibilities as President and CEO of the OMERS pension plan on March 12, 2007. I have known Michael for many years, long before we both joined Borealis, and am a great admirer of his consensual and inclusive approach to management leadership. We are both chartered accountants and worked together at an international accounting firm before Michael set off to conquer the world of complex and innovative financing. At a large investment-banking group, he developed creative financing structures in the public sector. He then took over the leadership of the corporate and structured financing practice at a private financial advisory firm, where he originated and negotiated business and financial opportunities for corporate and institutional clients. In 1998, Michael joined Borealis Infrastructure and is currently a senior vice president with broad experience in originating, structuring and managing infrastructure investments. While deal making and team leadership characterize his career, Michael very much has the human touch. For instance, he recently led the $1.3 billion purchase of MDS Diagnostics on behalf of OMERS. This company, with nearly 3,000 employees, is the Canadian leader in diagnostic medical testing. It has excellent management and is a solid platform for further growth inside and outside Canada. Needless to say, many employees were concerned when Borealis, as a professional asset management firm, became the new owners. This is where Michael’s human touch comes in. He led town-hall meetings with MDS staff across Canada. He had – cake delivered, inscribed: “Welcome to the Borealis/OMERS Family.” That is his style. I am proud to announce Michael’s new appointment. As OMERS CEO, I will work closely with him on the major strategic initiatives that he brings forward. OMERS Board appoints veteran investment executive as CEO Mr. Nobrega is president and chief executive officer of Borealis Infrastructure, which manages infrastructure investments for OMERS. His team at Borealis has built from scratch over the past eight years a $5.6 billion infrastructure portfolio for the benefit of OMERS members. The portfolio has generated investment returns of 14% to 22% annually in the past four years. The Board has given Mr. Nobrega full chief executive powers. Early priorities include improving management accountability and streamlining reporting to the Board, and enhancing relations with sponsors and stakeholders in a complex plan that serves pensioners and a diversity of workers and employers at the local government level throughout Ontario. “Michael has consistently delivered excellent investment results and put OMERS on the world stage as an astute infrastructure investor,” said OMERS Chair David Kingston. “He is a diplomatic leader who brings people together, creates collegiality and gets the job done. He has excellent relationships with all levels of government, with trade union leaders in the public and private sectors, with leading institutional investment partners and major corporations around the world. These talents, combined with his deep understanding of our investment strategy and commitment to the new governance structure, make him the ideal choice.” Borealis was formed in 1997 under Mr. Nobrega’s leadership and he has worked closely with OMERS since then. OMERS has held an economic interest in Borealis since 1998. Mr. Nobrega is a chartered accountant and holds an honours degree in economics and mathematics from the University of Toronto. In 2002, he received the Arbor Award for outstanding community service to the university. Mr. Nobrega has been a major contributor to OMERS financial success over the past decade. In the last three years, he has worked closely with OMERS senior management and has served on the advisory committee that reviews all investment proposals before they are submitted to OMERS Board for approval. He has also provided important guidance to OMERS on a range of regulatory and taxation issues. Mr. Nobrega said that the OMERS Board is one of the most effective of many he has worked with over the years. “A lot of the debate about lay versus expert boards is unnecessary and ill-informed noise. OMERS directors understand better than anyone the concerns and needs of plan members.” Currently, 76% of OMERS assets are invested in public markets, primarily stocks and fixed income securities. Mr. Nobrega will continue OMERS strategy of increasing investments in long-term alternative assets, such as real estate, private equity and infrastructure, from 24% to 37.5% of total assets. “This investment strategy will help to generate stable long-term investment returns to secure the retirement income of members.” Among his priorities are to ensure the effective introduction of supplemental plans as contemplated in legislation passed by Ontario in 2006, and to support the establishment of the Sponsors Corporation, which is now responsible for benefits and contributions. Borealis has assisted OMERS in acquiring $5.6 billion of equity interests in 29 infrastructure assets. Investments include the Bruce Power Nuclear Generation Facility, which produces 20% of the province’s electrical capacity, located on the shores of Lake Huron in Bruce County; Enersource Corporation that distributes electricity to 180,000 customers in the City of Mississauga; Enwave Energy Corporation that distributes heat and cooling to 144 buildings in Toronto’s downtown core; the Detroit River Tunnel that transports $20 billion of goods annually between Canada and the United States; and MDS Diagnostics that conducts 50 million medical tests annually in 250 locations across Canada. Other notable investments include two companies in Britain, Associated British Ports, one of the world’s largest port management companies, and Scotia Gas Networks that distributes energy to 12 million households. Mr. Nobrega will appoint a President to assume his responsibilities at Borealis. OMERS has $48 billion invested in assets around the globe and provides retirement benefits to approximately 372,000 members on behalf of over 900 local government employers across the province. Borealis Infrastructure makes $1.325-billion investment in MDS Diagnostic Services. Laboratory services are a critical part of the healthcare system – more than 70 percent of healthcare decisions involve a laboratory test. MDS Diagnostic Services is Canada’s largest provider of laboratory services, with more than 2,900 employees and annual revenue of $335 million. The company provides more than 50 million diagnostic tests to more than 10 million patients and nearly 20,000 physicians in Canada each year. “The purchase of MDS Diagnostic Services fits with OMERS strategy of increasing our allocation to infrastructure investments. These assets provide stable, long-term returns to help us meet our pension obligations,” said Paul Haggis, President & CEO of OMERS. “This investment will benefit OMERS plan members and help to maintain the quality and stability of laboratory results for physicians and their patients.” OMERS has no plans to fundamentally change the current operations of MDS Diagnostic Services and plans to retain current employees so that the company will continue to deliver the same high quality level of services to the Canadian healthcare system. “MDS Diagnostic Services has a talented professional staff and is a leading service delivery platform in the Canadian healthcare system,” said Michael Rolland, Senior Vice President of Borealis Infrastructure. “In addition to being a leader in laboratory services in key Canadian markets, this business has the potential to expand into other jurisdictions across the country.” MDS Inc. (TSX: MDS; NYSE: MDZ) is a global life sciences company that provides market-leading products and services that its customers need for the development of drugs and diagnosis and treatment of disease. MDS is a global provider of pharmaceutical contract research, medical isotopes for molecular imaging, radio therapeutics, and analytical instruments. Find out more at www.mdsinc.com. OMERS is one of Canada’s largest pension plans, with more than $41 billion in assets. It provides retirement benefits to about 365,000 members of behalf of approximately 900 local government employers across Ontario. Visit the OMERS website at www.omers.com for more information. Borealis Infrastructure identifies, invests in and manages OMERS infrastructure assets, which provide competitive and stable rates of return over a long investment horizon. In the business since 1998, Borealis is a global leader in infrastructure investing, with assets in energy, transportation, infrastructure buildings, including long-term care facilities and hospitals, pipelines and telecommunications. Visit the Borealis Infrastructure website at www.borealisinfrastructure.com for more information. Good morning, everyone. I’m glad that this is the first session of the day. It’s never too early to make money. Those of you concerned about finding enough money to pay pensions for the next 30 years or more have come to the right place. Infrastructure is quickly emerging as the new asset class and it should hold an important place in your asset mix because it will help you meet the long-term liabilities of your pension plan. I have been asked to discuss three topics: First, the performance of infrastructure investments as an asset class. Second, the link between infrastructure assets and liability-driven investment strategies. And third, the competitive landscape and investment opportunities. I would like to add a fourth topic for those of you who are new to infrastructure investing: how to most effectively get into this asset class. Before addressing the four topics, let me first provide a brief introduction to the infrastructure asset class and tell you about Borealis Infrastructure and our sponsor, OMERS. OMERS is the defined benefit public pension plan for municipal workers in the Province of Ontario. It has about 363,000 members of whom 100,000 or so are retirees. The fund has a fair market value of approximately $43 billion Canadian. Prior to 2003, OMERS asset allocation policy was much like many other large pension funds. It invested 85 percent in publicly traded equities and fixed income securities and 15 percent in alternative assets such as real estate and private equity - infrastructure being but a small subset of private equity at that time. In 2003, facing a large deficit leftover from the tech meltdown, OMERS undertook a strategic review and evaluation of its asset allocation. One key objective of this review was to better insulate the plan from the wild swings of the public equity markets. The outcome of this comprehensive review was a revised asset allocation policy that reduced exposure to public equities and fixed income to 60 per cent and increased the target allocation to alternative assets to 40%, representing a major rebalancing. At the same time, the OMERS board recognized Infrastructure as a distinct asset class and assigned it a target allocation of 15 percent of the fund’s value. That is larger than the allocation to either real estate or private equity and equals OMERS allocation to fixed income. The reason for the increased focus on infrastructure is that infrastructure assets generate stable long-term cash flows and can provide superior risk-adjusted returns. That makes them an almost perfect match for the pension plan’s predictable liability profile. Borealis Infrastructure is the investment entity responsible for OMERS global infrastructure strategy. Borealis pioneered infrastructure investing in Canada in 1998. Today, we manage a global portfolio of infrastructure assets with an equity value in excess of $4 billion and OMERS is the largest Canadian pension fund investor in this asset class. Let us now take a moment to define the ubiquitous term “infrastructure”. Broadly speaking, the infrastructure asset class comprises investments in the essential assets and services of a modern industrial economy. These assets are vital to the efficiency, comfort and competitiveness of a well-functioning modern society and include both public sector assets that have been privatized and other assets like pipelines that are typically in the private sector. Most infrastructure assets are well regulated and have monopolistic characteristics such as significant capital costs and low operating costs, barriers to entry and low elasticities of demand. Infrastructure assets are found in five key sectors: In the transportation sector are bridges, tunnels, roads, railways, urban transit, maritime ports and airports. In the energy sector are electricity generation, transmission and distribution … oil and natural gas pipelines … and renewable energy technologies from wind power to biomass facilities. Communications which include data and voice satellites and cable systems. The water sector includes water treatment plants, water distribution systems and wastewater facilities. And, finally, infrastructure buildings include assets as diverse as hospitals, schools, long-term care residences, prisons, courthouses and defence properties. As you can see, there is a rich choice available to sophisticated investors with the ability to originate and manage these assets on an ongoing basis. 1. Infrastructure Performance With that background, let us now turn to the second item on the agenda and consider the historical performance of infrastructure investments. Unfortunately, the empirical data available is somewhat limited, but the results we have seen so far are very encouraging. The Global Infrastructure Index calculated by FTSE, is comprised of the shares of 258 companies involved in the ownership, management or operation of infrastructure and utility assets around the world. It is important to note that the index reflects the performance of the companies’ shares rather than the infrastructure assets themselves and, as such, reflects the volatility of the public market, but it is nonetheless a handy proxy for the infrastructure asset class. Over the past six years, this index outperformed the broader market by a huge margin having risen 70% per cent in US dollars as compared to a 14% decline in the S&P 500. Year to date, the index is up 18.2% as compared to a 5% rise in the S&P 500. Our returns at Borealis have been similarly impressive notwithstanding the fact that they reflect a conservative market-to-market approach that doesn’t capture the rich valuations currently ascribed to infrastructure assets in the public markets. The portfolio of infrastructure assets which we manage returned 23% last year, 13% in 2004 and 16% in 2003 after adjusting for a change to a mark-to-market valuation policy in 2004. We have generated an average annual return on operating assets of 17% since 2002. I hasten to add, however, that the returns will narrow going forward as competition continues to heighten and new entrants bid up asset prices. Consequently, we maintain a long-term target return closer to 10-12 percent annually. 2. Infrastructure and Liability-Driven Strategies Let me turn now to my second topic: the link between infrastructure assets and liability-driven investment strategies. Pension fund managers have become sophisticated in analyzing the nature and duration of pension obligations and seeking to match them with appropriate investments of similar duration. As a fiduciary, you are looking for assets that generate reliable and growing cash flows to pay future benefits. You also seek assets that protect against inflation to offset built-in inflationary increases in liability costs. While publicly traded equities have many attractive features, the volatility associated with these investments make it more difficult to match them with a pension fund’s cash flow requirements or, more generally, a liability driven investment strategy. Furthermore, traditional fixed income and equity products may not deliver the level of risk-adjusted returns that defined benefit plans must earn consistently in the decades ahead, hence the move to alternative assets. Private equity is one choice, though this has become a very crowded field with too much money chasing too few attractive investment opportunities. Many people are also beginning to question whether, once one adjusts private equity returns to reflect the risk inherent in their leverage profile, the returns actually under-perform the public markets. Another attractive alternative investment is real estate. Quality real estate assets can generate the level of sustainable cash flows that pension plans require. Much like infrastructure, real estate also provides a natural hedge against inflation. Unlike infrastructure, however, real estate is a relatively mature asset class that is already part of most funds’ asset allocations. Among pension funds, the earliest to adopt infrastructure as a separate asset class were primarily in Canada and Australia, along with the Dutch fund APB and the Government of Singapore Investment Corporation. Most funds around the world have yet to introduce infrastructure to their asset mix policies. What are the risks and benefits of infrastructure investing? First, infrastructure investing requires long-term commitments and large amounts of capital. Think in terms of 30 years. Think of hundreds of millions of equity invested in a single asset with a multi-billion enterprise dollar valuation. Second, these assets are relatively illiquid. This is seen as one of the biggest risks, though the liquidity continues to improve as new investors flock to the asset class. Furthermore, this illiquidity risk should be of little concern to pension funds looking to match assets to liabilities over time periods that extend well beyond 30 years. Third, managing these assets to maximize long-term returns is demanding and often complex. It requires expertise in structuring ownership agreements. It requires monitoring and support of the asset operator through active governance and strategic oversight. This is not an exercise for those who take a passive approach to investing. However, as an active owner you can have control over the asset, which means controlling cash flows – exactly what any fiduciary should desire. Fourth are political risks. Governments can change their minds about privatizing assets even after you have invested considerable time and money in due diligence, structuring the deal and negotiating the asset transfer. That happened to us on the proposed long-term lease of a courthouse development in Canada. Despite repeated assurances it was committed to moving ahead, the government suddenly cancelled the lease negotiations in the 11th hour. It also happened to a consortium in which we were a member that offered to acquire a toll road network in France. The French government awarded the contract to a French-controlled consortium despite the fact that our consortium offered the highest price. Our vision for a high-volume rail and highway trade link between Canada and the United States continues to be on hold for political reasons. While we are confident that the project will ultimately succeed in some form, in the interim, the cost to Canada and the United States in terms of trade and productivity is enormous. There are other risks that include force majeure from natural disasters, operational and maintenance risks in preserving the quality of the asset, technology risk as the result of alternative innovations, and residual value risk as the worth of the asset at the end of the contract may be uncertain.These risks are more than offset by the benefits of infrastructure investments. The most significant benefit of infrastructure investments is that they generate stable, long-term cash flows. As I mentioned earlier, many assets, such as electrical and gas utilities, are government regulated. Others, such as toll roads, are closely watched by governments concerned about public safety and rates. The combination of regulatory regimes and strong, inelastic demand result in predictable long-term cash flows which result in return volatilities that are much lower than many other asset classes and, perhaps more importantly, can help pension funds match their long-term liabilities with similar long-term cash flows offering higher rates of return than fixed income products. Infrastructure returns also have a low correlation with those of other asset classes and, as such, a higher infrastructure allocation will reduce overall portfolio volatility. A third benefit is that infrastructure assets, being predominantly regulated or pseudo-regulated by governments, are inflation sensitive. They can be priced to compensate for inflation – an ideal fit for pension plans with indexed benefits. Again, this means that infrastructure investments facilitate better matching of pension funds’ long-term inflation -indexed liabilities. Finally, infrastructure assets are somewhat unique insofar as they provide collateral benefits for society at large as strong, efficient infrastructure can facilitate productivity improvements and attract the investment needed to secure long-term economic growth. I would like to turn your attention to a real life example. One of our major infrastructure assets is an investment in Bruce Power, a nuclear generating facility in Tiverton, Ontario that is currently undergoing a $4.5 billion refurbishment and re-start project. Once this project is completed, Bruce Power will provide approximately 25% of the province’s base load generation, providing Ontarian’s with a much needed supply of electricity. Bruce Power will also provide OMERS’ plan members with a steady, increasing cash flow to pay pensions. Indeed, once the re-start is complete, the cash flows from our investment in Bruce Power will prove to be an ideal investment for contributing to the payment of benefits to OMERS pensioners. All-in-all, this asset class should have an important place in the portfolio of a defined benefit plan seeking a large and reliable stream of cash flows matched to its pension benefit payments. 3. New Business Opportunities Let me turn now to the opportunities. The world is going through an astonishing transformation. Governments are opening their minds and treasuries to trusting the private sector to deliver what have historically been considered public services. And it seems this momentum is not necessarily deflected by changes in governments with different political views. The world leaders are the U.K. and Australia. But opportunities are also occurring throughout the globe. The principle of private ownership of public assets is now widely accepted by some 60 countries. Many governments are willing to sell infrastructure assets because they can no longer afford to deliver on their own all the services that people need and expect. Ageing populations, and a much smaller work force to support them, will increasingly strain the public purse. Furthermore, many governments are recognizing that the private sector can deliver higher quality public and quasi-public services more efficiently than the public sector. Influential stakeholders, business, political and (in some cases) trade union leaders, community groups and taxpayers themselves are also beginning to agree. Their support has created the winning conditions that will give impetus to pension fund investing in this asset class. And, as I described earlier, there is a rich choice of projects. Developed countries are seeking to maintain or renew ageing infrastructure without straining the public purse while developing countries are turning to the private sector to develop infrastructure that will provide the foundation for their future growth and prosperity. France, Germany, Greece, and Spain have privatized toll roads. Here in the United States, several states have outsourced their highway systems and a number of others are considering doing so. In North America, pension funds are acquiring oil and gas pipelines. Airports have been privatized in Central Europe, Australia and America and the UK. So have transmission assets in Chile and nuclear power plants in Canada. In Britain, Italy, Japan, South Africa, Australia and Canada, private sector investors are partners in hospitals and other healthcare facilities. Argentina, Brazil and Mexico have made good progress in privatizing government monopolies. India is among South Asian nations attempting to move infrastructure assets into the hands of long-term investors. Wherever you look, and whichever sector you look at, the opportunities are bountiful. This global perspective is especially important to U.S. pension funds because of their bias to investing in their home-country. A recent analysis found that 85 percent of the equities owned by U.S. pension plans are invested in U.S. companies – a far higher proportion than pension plans in the UK, Japan, Australia and Canada invest in their home markets. The analysis concluded that global equity allocations can reduce risk and increase alpha potential. The same can be said of infrastructure investing. There is much to commend diversifying your infrastructure assets away from home-country bias to participate in a variety of developing and mature projects around the globe. It should come as no surprise, in light of the wave of infrastructure investment around the world that new entrants are flocking to the sector in droves. Pension funds and other institutional investors are increasing their allocations to the sector. Major financial players are raising multi-billion dollar funds, and all this as corporate players are beginning to take advantage of rich equity valuations and make large investments. This heightened competition will inevitably dilute investment returns going forward. The massive need for new infrastructure around the world, however, will ensure that the asset class remains strong over the medium to long-term. The challenge, then, is having the professional resources to screen, evaluate, negotiate, acquire and manage those opportunities in an increasingly competitive environment. 4. Getting into Infrastructure Investing So let me close by outlining how you can get into this asset class. There are basically three ways to gain entry. One is through publicly traded infrastructure funds and corporate issuers in various infrastructure sectors. These funds provide access to experienced management teams and are liquid, but they are passive investment vehicles and often carry significant management fees. Listed issues are also exposed to the volatility of public markets and require more significant public disclosure. They are, however, an easy way to enter this asset class. The second is through private infrastructure funds. Like listed funds, many private funds offer experienced management teams and private funds are more insulated from swings in the public equity markets. They also typically carry significant management fees and provide investors with very limited governance rights. On the upside, these vehicles are able to keep more investment details confidential, and may offer opportunities to co-invest with the fund manager, particularly for larger investors. The final approach is direct investing, that is directly acquiring equity and/or debt in specific infrastructure assets. This approach provides much greater control over investments and can be much more cost effective. Developing an in-house team, however, can be costly and time consuming though these costs can be reduced by partnering in an established platform. In all three cases – a listed investment fund, a privately managed fund, or direct investment – you will be required, as fiduciaries to become knowledgeable about the asset class. And, I suggest, the more knowledgeable you become about the risks, the benefits and the opportunities, the more actively involved you will want to be. Let me use the example of Borealis Infrastructure as a case study of how the OMERS pension plan got involved in infrastructure assets. When we entered this asset class, no business model existed for a pension fund to be a direct investor. It had to be created. And it was a hard sell in the early years. A transaction could take up to three years to research, structure, negotiate and close. We had our work cut out for us in closing deals and finding investment partners. Initially, we went ahead on our own with small transactions. The first in 1999 was the $10 million purchase of a school and commitment to build 15 more for $170 million, which we leased back to government. Another was $45 million to acquire 50 percent ownership of a district energy company in Toronto and fund its development of an innovative deep lake water cooling system that uses cold water from deep in Lake Ontario to cool office buildings in the downtown core. Today, Enwave delivers clean, energy-efficient heating and cooling to more than 100 office buildings in Toronto. A third was a $10 million investment in 12 long-term care facilities with 1,500 beds. We invested a similar amount in a municipal utility. These transactions got us into the game. They helped to sharpen our skills and knowledge of different economic sectors – long-term care, education, alternative energy and energy distribution. The experience prepared us well for bigger things. As we expanded our expertise and market knowledge, we were able to successfully acquire a $600 million interest in Bruce Power, one of Ontario’s most important nuclear-powered electricity generators. Our partners are two large energy companies, a union and a professional association. We recently agreed to triple our investment in further developing the facility that will generate 25 percent of Ontario’s electricity requirements. We invested $175 million in the Detroit River Tunnel Project, a rail tunnel between Windsor and Detroit. CP Rail, one of Canada’s two continental railroads, is our partner. We are committed to investing another $300 million of equity to significantly expand this corridor to create a one-billion-dollar trade gateway asset. We followed that with a $200 million investment in a network of pipelines that deliver Alberta crude oil to U.S. markets in partnership with another Canadian pension fund and a major Canadian pipeline company. One of our significant investments outside of Canada is Scotia Gas Networks which was formed in 2004 when we partnered with another Canadian pension fund and Scottish and Southern Energy plc to acquire Scotland Gas Distribution Network and South of England Gas Distribution Network. Together, they have more than 5 million consumers. Our investment is $575 million. Our most recent acquisition was also in Britain with the purchase of Associated British Ports PLC, the largest U.K. ports operator. We are in a syndicate led by Goldman Sachs with a Singapore pension fund as a co-investor. Our investment is $900 million. In brief, our direct equity in infrastructure has grown from zero in 1999 to $4 billion today. The enterprise value of these assets exceeds $12 billion. Our equity share will generate $350 million in cash flow this year. We have already committed a further $2.5 billion in equity that will be drawn down to close acquisition of projects for which we have already been awarded, such as the replacement and refurbishment project at Bruce Power. And we have our sights on another $15 billion worth of assets in which we plan to invest about $4 billion. Our goal is to generate more than $1 billion in annual cash flow from infrastructure investments by 2010. That $1 billion compares with current benefit payments of $1.5 billion a year. Like your plan, OMERS annual benefit costs will escalate as baby boomers retire. By 2015, they will exceed $3.6 billion a year. Infrastructure assets have the capacity to deliver a large portion of the annual pension promise. But our story is about much more than acquiring equity ownership of infrastructure assets. Creating Borealis Infrastructure as a separate investment entity of OMERS protects the plan from material risks. It also does something else that is vitally important. It enables us to create a corporate culture where we can attract investment specialists motivated by pay-for-performance incentives comparable to many private sector merchant banks. We have developed a deep talent pool of 50 professionals and support staff at Borealis Infrastructure. It costs us a significant sum annually to maintain this company with skill sets in all aspects of sourcing, screening, selecting, structuring, bidding on, negotiating and managing infrastructure assets. This amount is less than half of a percent of the $4 billion of assets under management. Our success is driven by coveted relationships with decision makers in governments, investment institutions, and major corporations as well as specialized legal, investment, engineering, construction and accounting firms throughout Canada, the United States and Western Europe. In addition, we have sophisticated investment programs, information technology, complex financial monitoring and reporting, and extensive records management. Few pension funds or merchant banks in the world match the depth and breadth of expertise that we have assembled at Borealis Infrastructure. In the next stage of Borealis Infrastructure’s evolution, we will partner with other like-minded pension funds in the pursuit and acquisition of trophy infrastructure assets around the world. The nature of this partnership could take several forms: • Creation of a North American infrastructure fund, managed by Borealis Infrastructure, in which OMERS would be the lead and largest investor; this fund structure is particularly attractive to smaller pension funds without the resources to pursue and manage an in-house infrastructure program. • Borealis Infrastructure and OMERS would also consider expanding their reach of co-investment partners to include other major capital pools around the world. I do urge you to consider including infrastructure in your asset allocation. The case is persuasive: • the benefits of this asset class outweigh the risks; • infrastructure is an ideal fit for defined benefit plans because of its capacity to generate reliable and growing cash flows and provide a hedge against liability inflation; • infrastructure investments have the added benefit of providing collateral benefits to society at large and can enhance productivity and economic growth; • the past six years have demonstrated returns that far outperformed the stock market; and • while increased competition will dilute returns in the near term, the immense need for infrastructure will ensure the long-term success of the asset class. Thank you for inviting me to speak. I now look forward to your comments and questions. Admiral Consortium Closes Acquisition of Associated British Ports. Associated British Ports, the largest port operator in the United Kingdom, currently owns and operates 21 ports in the U.K. and employs 3,000 staff. ABP handles almost one quarter of U.K. seaborne trade, in addition to operating a number of transport-related businesses and a property division. It also has car import services at four U.S. ports. As part of the consortium, Borealis Infrastructure owns (331/3 per cent.), Goldman Sachs owns (231/3 per cent.), GIC's investment is (331/3 per cent.) and Infracapital Partners owns the remaining (10 per cent.). Under the terms of the deal, Borealis Infrastructure invested approximately $900 million to acquire its equity interest. This investment increases Borealis Infrastructure’s total infrastructure investments to approximately $4.3 billion. OMERS President & CEO Paul G. Haggis commented, “This is a great addition to our portfolio. The purchase of ABP fits with OMERS strategy of placing greater emphasis on private market investments, like infrastructure, that will provide reliable, long-term returns to help the pension plan to meet its pension obligations.” “We have reached a significant milestone in the development of our infrastructure assets with the acquisition of ABP,” said Michael Nobrega, President & CEO of Borealis Infrastructure, adding “this transaction provides Borealis Infrastructure with the unique opportunity to further expand its asset management activities by partnering with institutional investors in the ownership of these assets.” OMERS concentrates its infrastructure investments in six key sectors: transportation, energy, infrastructure buildings, pipeline, water and wastewater, and satellite communications. The complexity and illiquidity of the infrastructure asset class has enabled investors like Borealis Infrastructure to apply the skill level and experience of its professional team and the funding support of OMERS to generate superior, risk-adjusted returns. Borealis Infrastructure is a recognized leader in infrastructure investing. It currently manages a global portfolio of infrastructure assets with an equity value of more than $3 billion and has additional commitments of $4 billion. The team nearly doubled its return target in 2005, achieving 23.2% compared with a benchmark of 11.8%. Borealis Infrastructure Caps off Successful year with Return of 23.2% in 2005. Borealis nearly doubled its return target in 2005, successfully remaining the pre-eminent global investment manager for institutional investments in core infrastructure assets. In 2005, Borealis increased its investment in Bruce Power, Ontario’s largest independent electricity generator, with a $2.1 billion commitment to restart two reactors and refurbish two others. Borealis also closed an investment in Scotia Gas Networks valued at more than $600 million and completed an investment that gives OMERS a 30 per cent ownership of CIEL Satellite. In addition to this, Borealis completed the acquisition of CEDA International Corporation “CEDA” on behalf of OMERS. CEDA is a leading industrial, mechanical and electrical services company that serves the Alberta oil sands industry and complements OMERS growing energy generating portfolio. "I'm pleased to report another excellent year due to our ability to capitalize on major infrastructure opportunities," said Michael Nobrega, Borealis Infrastructure President & CEO. "Our focus has always been on long term earnings and revenue growth and once again we were able to achieve record results through 2005, one of the most active years in our history." As a result of Borealis’s focus on large, core infrastructure opportunities, its assets nearly doubled to $2.4 billion in 2005, up from $1.3 billion a year ago. Currently, this asset class accounts for approximately 5.7 per cent of the OMERS Fund and the long-term target in this asset class is in the range of 15 per cent. Focus for 2006 Borealis Infrastructure’s business focus for 2006 will be on building and extending upon its current portfolio, opening up co-investment participation for third party investors and acquiring interests in assets outside of Canada. Borealis will also continue to play a pivotal role in fusing public interest with private means throughout Canada. Through its recent expansion in western Canada and Borealis managed investments in OMERS Energy, Express Pipeline and CEDA, Borealis will continue to play an important role in the western Canadian business community. Borealis Infrastructure identifies, invests in and manages OMERS infrastructure assets that provide competitive and stable rates of return over a long investment horizon. Borealis Infrastructure is an OMERS investment entity. Visit the Borealis Infrastructure website at www.borealisinfrastructure.com for more information. Borealis Infrastructure to increase investment in Bruce Power. The agreement is subject to a favourable income tax ruling from the Canada Revenue Agency, which we hope to receive shortly. Restarting those units will boost Bruce Power’s output to more than 6,200 MW, making it the source of about 25 per cent of Ontario’s electricity on a typical day. Following the restart, the company’s eight units will supply the annual power needs of more than four million homes. “Our increased investment in Bruce Power is consistent with the rebalancing of our asset mix to put greater emphasis on private market assets such as infrastructure investments,” said Paul Haggis, President & CEO of OMERS. “Energy generation is an attractive opportunity for large institutional investors like OMERS and Bruce Power has been a successful investment for us. It meets our investment criteria by providing long term, stable, inflation-protected returns to help us meet our future pension obligations.” Under terms of a long-term agreement with the Ontario Power Authority (OPA), Bruce Power will restart Units 1 and 2, replace the steam generators on Unit 4 and extend the operating life of Unit 3 by replacing its steam generators and fuel channels when required. “The investment demonstrates Borealis Infrastructure's commitment to invest in the renewal and enhancement of Ontario's infrastructure assets, “said Michael Nobrega, President & CEO of Borealis Infrastructure. “This investment is a win-win for the Province of Ontario and OMERS members across the province. The Province secures significant additional long-term electricity supplies at reasonable cost and the investment provides stable, long-term returns for the Fund.” Work to restart Units 1 and 2 will begin immediately with the first unit expected to be online in 2009, subject to approval by the Canadian Nuclear Safety Commission (CNSC). An Environmental Assessment for an expanded Bruce A restart is currently underway and a final report is expected to be submitted to the CNSC later this year. Under terms of the agreement, Bruce Power will be paid $63/MWh for all of the output from Bruce A. Electricity from Bruce B will continue to be sold into the Ontario spot market and to various customers under fixed-priced contracts. Bruce Power is Ontario’s largest independent generator and a partnership among TransCanada Corporation, BPC Generation Infrastructure Trust, Cameco Corporation, the Power Workers’ Union and The Society of Energy Professionals. Borealis Infrastructure identifies, invests in and manages OMERS infrastructure assets that provide competitive and stable rates of return over a long investment horizon. Borealis Infrastructure is an OMERS investment entity. Visit the Borealis Infrastructure website at www.borealisinfrastructure.com for more information. OMERS is one of Canada's largest pension plans, with more than $39 billion in assets. It provides retirement benefits to 355,000 members on behalf of 900 local government employers across Ontario. Visit the OMERS website at www.omers.com for more information.
The total value of the acquisitions is C$7.25 billion (Pounds Sterling 3.162b). Of this, C$4.78 billion (Pounds Sterling 2.082b) is being funded by non-recourse borrowings and C$2.48 billion (Pounds Sterling1.08b) is being funded by equity and shareholder loans. SGN, a holding company for the businesses being acquired, is owned by Borealis Infrastructure Management Inc., an OMERS company; the Ontario Teachers' Pension Plan; and Scottish and Southern Energy. Ontario Teachers’ and Borealis each invested approximately C$555 million for a 50 per cent combined stake in SGN; Scottish and Southern Energy owns the remaining 50 per cent of the consortium. In total, the two networks – now named Scotland Gas Networks and Southern Gas Networks – comprise 73,000 km of gas mains, delivering gas to approximately 5.6 million industrial, commercial and domestic customers. “I am pleased that this acquisition has been successfully completed,” said John Morea, Chief Operating Officer of SGN. “Our priority will be to ensure that SGN distributes gas to its customers in the south of England and in Scotland safely, reliably and efficiently.” Jim Leech, Senior Vice-President, Ontario Teachers’, said he is looking forward to a long-term partnership in these gas distribution networks. “We believe this investment will help us pay pensions to the teachers of Ontario by providing stable, long-term returns. The U.K. gas sector has a sophisticated and transparent regulatory framework that provides a strong environment for private investment. We are looking for similar opportunities to build our infrastructure portfolio both at home and abroad.” OMERS President & CEO Paul G. Haggis commented, "We’re very pleased to be a part of this consortium. OMERS continues to realign its asset mix, shifting a portion of capital from publicly traded investments to infrastructure and private equity assets. In the future we will look to invest about 15 per cent of the Fund in infrastructure assets, as compared to the current 3.5 per cent." "Infrastructure assets such as this are a great fit for pension plans – they provide long-term, stable returns to pay pensions. We are excited about the opportunity to pursue similar opportunities in Canada and look forward to seeing the results of recent government efforts to develop and encourage these kinds of investments.” OMERS is one of Canada's largest pension funds, with about $36 billion in assets. OMERS recently announced an asset mix strategy which will see a shift from four per cent of its assets invested in infrastructure today to 15 per cent over the next few years. It provides retirement benefits to 355,000 members on behalf of 900 local government employers across Ontario. The Ontario Teachers' Pension Plan is an independent corporation responsible for investing the fund's $85 billion in assets and for administering the pensions of Ontario's 255,000 active and retired teachers. Ontario Teachers' has global infrastructure and timberland assets of more than $3 billion and is actively seeking to expand its portfolio of electrical transmission systems, oil export pipelines, toll highways, power generation and airports. Scottish and Southern Energy is one of the U.K.'s largest energy companies. It is involved in the generation, transmission, distribution and supply of electricity to industrial, commercial and domestic customers; the storage and supply of gas; electrical and utility contracting; domestic appliance retailing; and telecoms. It is listed on the London Stock Exchange.
OTTAWA (September 27, 2004) - Ciel Satellite Group, a new Canadian owned and controlled communications satellite venture, has received provisional authority from Industry Canada to operate a broadcast satellite (BSS) at 129 degrees West orbital location. Founded earlier this year by a strong combination of partners, Barrett Corporation, Smyth Satellite Holdings Inc., Borealis Infrastructure and SES AMERICOM Inc., Ciel expects to begin satellite operations before August 2005. Ciel is led by Canadian satellite industry veteran Kevin Smyth and an executive management team that brings more than 60 years of industry leading experience to their respective roles. With this team in place, Ciel plans to develop an independent Canadian fleet of satellites. As it builds its business, Ciel intends to contribute significantly to Canadian telecommunications infrastructure. Ciel will offer wholesale satellite capacity to broadcasters, direct-to-home programmers, VSAT and enterprise networks, educational and distance learning networks, as well as cultural and community organizations seeking broadband connections. Ciel will bring the advantages of competition to the Canadian market while creating industrial benefits, and expanding Canada’s role in the global satellite industry. “This announcement is a positive for Canadian industry players who will soon benefit from the strengthened competitive environment that Industry Canada has developed,” said Kevin Smyth, CEO of Ciel. “We are grateful to Industry Canada for the authority to operate a BSS satellite from 129 degrees West. We believe the time is right to license a second Canadian satellite operator and we will work hard to merit the award of future licences.” “Industry Canada’s process was efficient and responsive. We are committed to covering all regions of Canada, making bandwidth broadly available to potential users, and working with Canadian industry and Industry Canada,” said Gerry Wall, Ciel’s Vice President of Government Affairs. With an experienced and expert team of partners, Ciel is poised to become a Canadian high technology force with the resources to succeed: Ciel is led by satellite experts from Barrett Corporation and Smyth Satellite Holdings, two Canadian organizations with extensive experience in the domestic and international satellite industry. Ciel has aligned itself with Europe-based SES GLOBAL, one of the world’s largest and financially stable satellite companies with over 40 spacecraft in operation. Participation in Ciel is supported by SES AMERICOM, a wholly owned subsidiary of SES GLOBAL, with more than 30 years experience, SES AMERICOM is recognized worldwide as a leading provider of satellite capacity. Ciel’s financial partner is Borealis Infrastructure, Canada’s leading manager of infrastructure investments. Borealis is an Ontario Municipal Employees Retirement System (OMERS) corporation. OMERS manages pension fund assets valued at $34 billion. About Ciel Satellite Group Barrett Corporation is a privately held international management company, based in Woodstock, New Brunswick. Its Barrett Xplore subsidiary provides Broadband Internet Services throughout Canada under the Xplornet Brand. Xplornet provides Broadband Internet services and value-added ISP services via Wireless and Satellite high-speed connectivity. Barrett Xplore was also instrumental in the success of Star Choice satellite television, having been the national marketing and distribution partner for the service from launch. Barrett Xplore, Barrett Marketing Group and Dixie Sales, provide sales, marketing, logistical and distribution support for several other well-known brands in the consumer electronics, recreational, clothing and outdoor power equipment industries throughout North America. Borealis Infrastructure identifies, invests in and manages infrastructure assets that provide institutional investors with competitive and stable rates of return over a long investment horizon. Borealis Infrastructure is an OMERS corporation. With approximately $34.0 billion in net investment assets, OMERS is one of Canada’s largest pension funds. SES GLOBAL (Euronext Paris, Luxembourg and Frankfurt stock exchanges: SESG) wholly owns two market-leading satellite operators, SES ASTRA in Europe, and SES AMERICOM in the US. The Company also holds strategic participations in AsiaSat in Asia, Star One and Nahuelsat in Latin America, and NSAB in Europe. Via its WORLDSAT subsidiary it provides unparalleled connections to the premier regional satellite fleets of these SES GLOBAL partners. AMERICOM Government Services provides network solutions and bandwidth to the US government and its contractors. SES GLOBAL can provide outstanding satellite communications solutions via a fleet of 40 plus satellites across the globe. In addition, SES GLOBAL is a shareholder in ORBCOMM, a provider of wireless data communications services through a low-earth orbit (LEO) satellite network, and in satellite technology companies Gilat Satellite Networks Ltd. and ND Satcom. SES GLOBAL is also a founding shareholder in SATLYNX, a Luxembourg-based joint venture with Gilat and Alcatel Space, which has created an unrivalled portfolio of reliable and cost-efficient two-way satellite broadband service solutions to enterprises/corporates, small office/home office (SOHO) and local communities all over Europe. Additional info on SES GLOBAL at: www.ses-global.com The Ottawa-based Smyth Satellite Holdings is a Canadian company established by Kevin Smyth and Gerry Wall, Ph.D. The two principals of the firm combine to provide comprehensive expertise in the areas of satellite operations, sales and marketing, business planning, regulatory and policy matters and familiarity with Canadian telecommunications and broadcasting industries.
OMERS to buy CEDA Holdings Ltd. from Precision Drilling Corp. for $274M CEDA, headquartered in Calgary with over 1,800 union and non-union employees, has four operating units: industrial, mechanical, catalyst and electrical. It provides services to the oil refining, petrochemical, pulp and paper, and power generation "As a leading industrial, mechanical and electrical services company well established in the expanding Alberta oil sands, CEDA represents an excellent investment opportunity," said Paul Haggis, president and CEO of OMERS. "We believe CEDA has growth potential and is the type of long-term investment that we need to meet the future pension obligations of our members." The investment is being made through Borealis Investments Inc., a subsidiary of OMERS, which is one of Canada's largest pension plans, with more than $39 billion in assets and provides retirement benefits to 355,000 members. Precision Drilling (TSX:PD) announced Aug. 31 that it planned to sell CEDA but didn't identify the buyer. Last week, it announced plans to join a growing oilpatch trend by converting into an income trust with a lucrative cash and share payout to current shareholders. Precision's trust conversion is subject to shareholder approval, with the reorganization expected by November.
TORONTO (August 31, 2004) - The Ontario Teachers' Pension Plan and Borealis Infrastructure (an OMERS investment entity) today announced that they hold 50% of a consortium that has an agreement to acquire the Scotland and the South of England gas distribution networks from National Grid Transco plc. Teachers' and Borealis Infrastructure each hold 25 per cent of the consortium and Scottish and Southern Energy plc (SSE) holds the remaining 50 percent. SSE will also provide certain corporate and management services for the consortium. "We look forward to working with SSE and Borealis Infrastructure in this long-term partnership for gas distribution networks in the UK," said Robert Bertram, Executive Vice-President Investments, Ontario Teachers'. "We believe these investments will provide stable, long-term returns to help us pay pensions to the teachers of Ontario. "Most of our infrastructure investments are outside Canada because that's where we are finding good opportunities. In this instance, for example, there is a sophisticated and transparent regulatory framework in the UK gas sector which provides a strong environment for private investment. We are looking for similar opportunities to build our infrastructure portfolio." Borealis Infrastructure CEO Michael Nobrega commented, "We're very pleased to be part of this consortium and look forward to a profitable partnership. This is a significant milestone as OMERS begins the process of realigning its asset mix, shifting a portion of capital from publicly traded investments to infrastructure and private equity assets, as OMERS announced earlier this year. "We expect it will generate the long-term, stable returns we seek. We would welcome the opportunity to pursue similar opportunities in Canada and look forward to seeing the results of government efforts to bring about positive change to energy regulations here at home." Some of the best infrastructure investments for pension plans are price-regulated monopolies. Typically they provide stable, regulated returns that correlate well with inflation -- a good match for Teachers' and OMERS' pensions which include inflation protection for retirees. Borealis Infrastructure and Teachers' also have a strategic alliance in an investment in the Express pipeline which transports oil from Western Canada to markets in the U.S. Ian Marchant, Chief Executive of SSE, said, "We have been working very closely with Ontario Teachers' and Borealis for almost a year now, and I am very pleased that this has culminated in this agreement. It is clear that we all have a similar focus on investment for the long term and on securing sustainable returns from infrastructure assets. I am confident that this will be a very successful and effective partnership going forward." The total value of this new investment will be approximately $7.5 billion (Pounds Sterling 3.162 b). Teachers' and Borealis will each invest approximately $665 million (Pounds Sterling 280). SSE will invest $1.2 billion (Pounds Sterling 520 million) and the balance will come from third-party debt. The acquisitions remain subject to approvals from the Office for Gas and Electricity Markets and from the Health and Safety Executive and are expected to be completed in the spring of 2005. The Scotland network comprises around 24,000 km of gas mains, delivering gas to 1.7 million industrial, commercial and domestic customers. The South of England network comprises around 49,000 km of gas mains, delivering gas to around 3.9 million industrial, commercial and domestic customers. Borealis Infrastructure identifies, invests in and manages OMERS infrastructure assets that provide competitive and stable rates of return over a long investment horizon. Borealis Infrastructure is an OMERS investment entity. OMERS is one of Canada's largest pension funds, with approximately $34.0 billion in net investment assets. OMERS recently announced an asset mix strategy which will see a shift from 4 per cent of its assets invested in infrastructure today to 15 per cent over the next few years. It provides retirement benefits to 340,000 members on behalf of 900 local government employers across Ontario. The Ontario Teachers' Pension Plan is an independent corporation responsible for investing the fund's $79 billion in assets and for administering the pensions of Ontario's 250,000 active and retired teachers. Ontario Teachers' has global infrastructure and timberland assets of $2.3 billion and is actively seeking to expand its portfolio of electrical transmission systems, oil export pipelines, toll highways, power generation and airports. Scottish and Southern Energy is one of the UK's largest energy companies. It is involved in the generation, transmission, distribution and supply of electricity to industrial, commercial and domestic customers; the storage and supply of gas; electrical and utility contracting; domestic appliance retailing; and telecoms. It is listed on the London Stock Exchange and has a market capitalization of around Pounds Sterling 6 billion.
Bruce Power acquires interest in General Hydrogen Corporation "General Hydrogen is an innovative company with an exciting future; the hydrogen economy is energy's new frontier," said Duncan Hawthorne, Bruce Power President and Chief Executive Officer. "This investment positions Bruce Power as a key player in the development of the new hydrogen economy and recognizes the synergies between nuclear power generation and the promise of a cleaner environment." "The path ahead to a hydrogen economy is a long and challenging journey that requires the cooperation of industry, academia and governments," said Geoffrey Ballard, Chair of GHC. "This shift involves the confluence of multiple economic sectors which includes the energy sector and GHC welcomes Bruce Power as its newest strategic partner." One of Ontario's largest independent power generators, Bruce Power is located in Kincardine about 250 kilometres north-west of Toronto. It employs more than 3,000 highly-skilled employees with experience in the safe and reliable operation of nuclear generating stations. With safety as its first priority, Bruce Power generates enough clean electricity to supply approximately 15 per cent of Ontario's power needs. General Hydrogen Corporation, headquartered in Vancouver, British Columbia, was formed in 1999 by Geoffrey Ballard and Paul Howard, co-founders of Ballard Power Systems, and Michael Routtenberg, who is President and CEO. General Hydrogen's business is to develop, integrate and deploy, together with its Strategic Partners, technology, systems and infrastructure for the production and delivery of hydrogen. These activities will facilitate the establishment of an energy delivery network for hydrogen fuel cell vehicles and, in turn, the emergence of the hydrogen economy.
OMERS acquires interest in the Confederation Bridge The transaction represents a strategic acquisition for OMERS. Its investment in SCDI will provide a steady, reliable, long-term return for the fund. The other SCDI shareholders are Vinci Concessions Canada Inc., with 49.9%, and Strait Crossing Inc., with 15%. Ballast Nedam will continue to own 1.1%. These three shareholders also comprise the original consortium that built the Bridge. SCDI and its wholly-owned subsidiary company, Strait Crossing Bridge Limited, manage, maintain and operate the 12.9 kilometre Confederation Bridge which joins Prince Edward Island to New Brunswick under a concession agreement with the Government of Canada until 2032. SCDI earns revenues through toll charges on vehicular traffic using the Bridge. Toll rates are government-regulated through a mechanism that allows the rates to be increased annually at 75% of the past year’s inflation (using the gross CPI index). Traffic is comprised of passenger and commercial traffic although a seasonal ferry service also operates from spring to fall; the Bridge is the dominant pathway for the truck transport of goods to and from the island. Still, the bulk of the revenues are from the passenger traffic. The Bridge, which opened in the spring of 1997, cemented a long-term commitment by the Government of Canada to provide a permanent, year-round transportation link to the island. It carries two lanes of traffic 24 hours a day, seven days a week and takes approximately 10 minutes to cross at normal traveling speeds. OMERS is one of Canada’s largest pension funds and provides secure retirement benefits to VINCI Concessions Canada Inc. is a subsidiary of VINCI S.A., a world leader in concessions, construction and related services.
Private sector needs climate of certainty before investing to solve energy challenges “Investments in the energy sector, whether to create additional generating capacity or for other purposes require certainty,” said Michael Nobrega, president of Borealis Infrastructure Management Inc. “While one government cannot bind another with respect to energy policy, any perceived risk that the rules of the game can be changed at any time will work against the investments which need to be made in the sector for the benefit of the people of Ontario,” Mr. Nobrega said. “The challenge for the government is to develop an energy policy supported by broad political, business, union and public consensus.” Borealis manages more that $1 billion of equity capital in Canada’s energy sector on behalf of pension fund investors, including a one-third interest in Ontario’s Bruce Power nuclear facility, the largest nuclear power plant in North America. Mr. Nobrega urged that the energy sector be governed by independent regulators, similar to the Ontario Securities Commission in the investment industry; that government commit to competitive electricity generation; that an independent wholesale market be developed over the long term; that Hydro One be restricted to the transmission business; and that Ontario electricity distribution be realigned into six or seven geographic utilities with at least 750,000 customers each. He added that action on these points would displace confusion and dissatisfaction among consumers, government leaders and other participants “and would go a long way to restoring confidence, stability and long-term investment activities in Ontario’s electricity sector.”
Great news in the Canadian nuclear sector "Nuclear power emits essentially no greenhouse gases and so is crucially important if we are to even approach our Kyoto commitments," says Bill Clarke, President of the Canadian Nuclear Association. "We will be strongly encouraging government to fully recognize the role of nuclear in any emissions trading system that is set up in Canada." With the expected re-start of three of Ontario's CANDU reactors this summer, two at Bruce Nuclear Station and another at Pickering, the province will soon be receiving about 50% of its electricity from this clean, safe power source. "With the increasing demand for environmentally responsible, affordable electricity, it is essential that these reactors come on line as soon as possible," asserts Dr. Terry Rogers, Emeritus Professor of Mechanical Engineering at Carleton University. The recent sale of Bruce Power to a consortium of Canadian-based companies is a further demonstration of strong confidence on the part of the private sector in the future of nuclear power in Canada. Returning these reactors to service will be a boon to employment in their local communities. 1,145 permanent jobs will be created in the Pickering area alone, once that station is fully operational. The nuclear industry in Canada has some great news to tell in other areas as well:
"An objective assessment of our industry shows clearly that Canadian nuclear companies have developed the technological prowess to contribute significantly to the solving of many of our country's, indeed the world's, environmental and societal problems," concludes Bill Clarke. "Canadians have a right to be proud of this homegrown dream come true. Nuclear technology is clearly 'the power of possibilities'."
Transfer of Bruce Power lease signals investor confidence in Ontario energy sector "This new lease agreement is a clear indication of continuing investor confidence in Ontario's electricity market," said Gilchrist. "Now that the deal has been finalized, the 3,200 Bruce employees will be able to work toward getting Bruce A units 3 and 4 up and running before next summer." Together, units 3 and 4 at the Bruce A Generating Station will generate 1,500 megawatts of clean electricity, enough to supply a city the size of Ottawa. The company is currently refueling Unit 4. Pending further regulatory approvals, Unit 4 could be returned to service in April, followed by Unit 3 in June. Financial concerns involving British Energy's British operations led it to withdraw from involvement in Bruce Power. As a result of a deal arranged last December with British Energy, Cameco increases its 15-per-cent interest of Bruce Power to 31.6 per cent. TransCanada Pipelines Ltd. and BPC Generation Infrastructure Trust, a trust established by the Ontario Municipal Employees Retirement System, will also each hold 31.6 per cent of Bruce Power, while the Power Workers Union will own four per cent and The Society of Energy Professionals will own 1.2 per cent. The consortium will also take over British Energy's financial assurance obligations to Bruce Power regarding its Canadian Nuclear Safety Commission licence and purchase power agreements with customers. Bruce Power already operates four units in the Bruce B power complex, capable of producing more than 3,000 megawatts of power. Bruce Power has shown it is capable of operating these units efficiently and safely, and works closely with the Canadian Nuclear Safety Commission (CNSC) to ensure that the highest standards are always maintained. The transfer of the lease to the new consortium removes any uncertainty about who will be responsible for operating these facilities. Bruce Power is scheduled to appear before the CNSC on February 26, 2003, for its final licence hearings on the Bruce A restart project. Bruce Power CEO Duncan Hawthorne recently indicated that because of their continued success, they may soon be in a position to begin the restart process for Bruce A Units 1 and 2. This would add a further 1,500 megawatts of new supply.
Canadian-based consortium officially joins Bruce Power Limited Partnership "The successful conclusion of these negotiations ensures that we can now look to the future with renewed confidence," said Bruce Power Chief Executive Officer Duncan Hawthorne. "With the solid backing of our new-look partnership, our financial position has been secured." Under the revised partnership, Cameco has more than doubled its original stake in Bruce Power to 31.6%. TransCanada and BPC Generation Infrastructure Trust, a trust established by the Ontario Municipal Employees Retirement System, will also hold 31.6% stakes, while the PWU will own 4% and The Society 1.2%. The consortium has also assumed British Energy's financial assurance obligations to Bruce Power regarding its Canadian Nuclear Safety Commission (CNSC) licence and power purchase agreements with customers. As well, the consortium has acquired British Energy's 50% interest in Huron Wind, Ontario's first commercial wind farm. A partnership with Ontario Power Generation (OPG), Huron Wind's five 1.8 MW turbines are located on land adjacent to the Bruce Power Visitors' Centre. Having already received CNSC approval for its Environmental Assessment of the Bruce A restart project, Bruce Power will appear before the commission on Feb. 26 for Day 2 of its licensing hearing. Pending regulatory approval, Bruce Power intends to return Bruce A Unit 4 to service by the end of April, followed by Unit 3 before this summer's period of peak demand. Ontario's largest independent power generator is located in Kincardine about 250 kilometres north west of Toronto. Bruce Power employs more than 3,000 highly-skilled employees with experience in the safe and reliable operation of nuclear generating stations. With safety as its first priority, Bruce Power generates enough clean electricity to supply approximately 15 per cent of Ontario's power needs.
BC Gas Inc. Consortium closes acquisition of Express Pipeline System The Express Pipeline System is a major export pipeline for Canadian petroleum production, transporting crude oil from Hardisty, Alberta to Casper, Wyoming, and on to the Wood River, Illinois area via the Platte Pipeline. BC Gas Inc. is a leading provider of energy and utility services in western Canada. Through BC Gas Utility and Centra Gas British Columbia, the company distributes natural gas to 847,000 customers, representing more than 95% of natural gas consumers in British Columbia. Through Corridor Pipeline (currently being commissioned) and Trans Mountain Pipe Line, the company provides petroleum transportation services from the Athabasca oil sands to Edmonton, and from Edmonton to British Columbia and Washington State. BC Gas common shares are traded on The Toronto Stock Exchange under the symbol "BCG". Borealis Infrastructure manages infrastructure investments on behalf of OMERS (Ontario Municipal Employees Retirement System) and other Canadian pension plans. OMERS is the pension plan for more than 300,000 active and retired local government employees in Ontario and one of Canada's largest funds with nearly $34 billion in assets. The Ontario Teachers' Pension Plan, with assets of $68 billion, invests to secure the retirement income of over 300,000 teachers and their families. Teachers' has over $1.7 billion in infrastructure investments worldwide including toll roads, airports and electricity transmission systems.
Borealis expands its asset management to oil pipelines Known as the Express Pipeline System, the asset consists of the 24-inch Express pipeline that delivers up to 172,000 barrels per day of crude from Alberta’s transportation hub at Hardisty to Casper, Wyoming and the 20-inch Platte pipeline that delivers up to 150,000 barrels per day from Casper to Wood River, Illinois. The system serves refineries in Montana, Wyoming, Utah, Colorado, Kansas and Illinois. “This is a tremendous asset that not only provides steady returns and cash flow to the investors but has the potential for substantial value added growth,” commented Robert Watters, Senior Vice President of Borealis. “Crude exports from Canada to the United States can be increased by more than 60 per cent through the existing pipeline with a comparatively modest investment in pumping stations.” Founded in 1998, Borealis is Canada’s leading independent manager of alternative capital assets. Borealis originates, structures and manages alternative assets on behalf of large institutional investors. Borealis is headquartered in Toronto and is controlled by two of Canada’s largest pension funds. |