Impulsora del Desarrollo y el Empleo en América Latina, S.A.B. de C.V. (IDEAL), Canada Pension Plan Investment Board (CPPIB) and Ontario Teachers’ Pension Plan (Ontario Teachers’) announced that they have entered into a definitive agreement to invest in Pacifico Sur, a 309-kilometre toll road in Mexico. The investment will enhance the partnership that formed to acquire Arco Norte, a Mexican toll road, in 2016.
Under the terms of the agreement, IDEAL will retain a 51 per cent ownership of the Guadalajara-Tepic, S.A. de C.V. highway concession (CAGT), the concessionaire of the Pacifico Sur toll road. CPPIB and Ontario Teachers’ together will acquire a 49 per cent minority ownership position for an initial Ps$4,539 million (CAD$314 million), with the possibility of a second payment of up to Ps$3,141 million (CAD$218 million). CPPIB will hold a 29 per cent stake and Ontario Teachers’ will hold a 20 per cent stake, which is consistent with the ownership structure in Arco Norte.
Pacifico Sur connects Mexico’s central valley with the country’s northwest region, acting as a critical link between the cities of Guadalajara and Tepic for both commercial transport vehicles and tourism-driven light traffic. The toll road extension also includes two recently opened bypasses around the two cities.
IDEAL, CPPIB and Ontario Teachers’ are committed to the responsible, long-term ownership and development of Pacifico Sur and are pleased to expand this partnership with a further investment in the infrastructure sector in Mexico.
“Pacifico Sur toll road offers CPPIB a resilient income stream underpinned by a highly diversified traffic base and a strategic location within the country,” said Scott Lawrence, managing director, head of infrastructure, CPPIB. “Broadening our partnership with IDEAL and Ontario Teachers’ through our second investment in Mexican infrastructure will allow us to build on our track record of care and good governance.”
“The Pacifico Sur toll road represents an important addition to our Latin American portfolio of long-term, inflation-linked infrastructure assets,” said Dale Burgess, Ontario Teachers’ senior managing director, infrastructure and natural resources. “We are excited to be building further on our partnership with IDEAL and CPPIB with this second shared investment in core infrastructure in Mexico.”
CAGT holds title to Pacifico Sur’s concession granted by the Secretary of Communications and Transport to build, operate, administer, conserve, and maintain the Guadalajara-Tepic highway, the Sur de Guadalajara (South Guadalajara) bypass and the Tepic bypass in the states of Jalisco and Nayarit, in the Mexican Republic. The Pacifico Sur concession agreement has 23 years remaining, with the possibility of an extension of up to 30 additional years.
