Canadian pension fund commits $3.2 billion abroad as domestic infrastructure plans struggle to take shape
Canada’s largest pension funds are deploying billions into foreign infrastructure, while similar opportunities at home remain stalled.
The Caisse de dépôt et placement du Québec’s $3.2bn commitment to the UK’s Sizewell C nuclear power project underscores what many in the sector view as Canada’s ongoing struggle to attract domestic pension investment in large-scale infrastructure.
The Caisse acquired a 20 percent stake in Sizewell C, according to Financial Post, marking its first direct investment in nuclear energy.
The UK government owns 44.9 percent of the project, and the financing is structured to limit construction risk — a critical factor for institutional investors.
Officials told the Canadian Press that the Caisse would start receiving compensation immediately, with safeguards in place to protect returns in the event of cost overruns or delays.
McGill University finance professor Sebastien Betermier said the UK government’s structure had reduced construction risk and enabled early dividend yield.
He described the deal as “an ambitious project in terms of size and complexity,” and noted that it shows “it is possible to generate win-win opportunities for governments and pension funds in infrastructure (projects), and hopefully we can learn from it here in Canada.”
The Sizewell C project is expected to supply more than 60 years of “clean, reliable power to the UK grid,” with the goal of strengthening energy security, according to Financial Post.
French newspaper Les Echos reported that the Caisse and Amber Infrastructure together will provide between 25 to 30 percent of the project’s capital.
EDF will reportedly take a 12.5 percent stake with a £1.1bn investment, while UK utility Centrica and others are also involved.
The deal’s structure contrasts with Canadian infrastructure efforts.
Betermier, writing in a May paper for the C.D. Howe Institute, pointed to a lack of coordination and evaluation frameworks in Canada.
He noted that since 2016, over $180bn has been committed across more than 20 federal departments and agencies, often crowding out private capital.
“Having multiple grants and investment agencies operating in the same market means there is a high risk of competition between the agencies,” he wrote.
He also stressed the need for engagement with the private sector.
Efforts by the federal government to involve pensions in large-scale infrastructure have yielded limited results.
Projects have been criticised for lacking sufficient size, policy assurances, or revenue guarantees that would make them attractive to private investors.
An exception is the Caisse’s investment in Montreal’s REM light rail system.
Though the project faced significant cost overruns — rising from $6.3bn in 2018 to $8.34bn in 2023 — the Caisse structured it to generate returns from ridership, advertising, and real estate, aiming for an annual return of eight percent over 30 years.
The limited availability of investable infrastructure assets in Canada remains a key challenge.
In his C.D. Howe paper, Betermier wrote that most major infrastructure — including ports, utilities, railways, and airports — remains publicly owned at the federal, provincial, or municipal level.
This restricts opportunities for institutional investors to pursue deals comparable to those available in markets like Australia or the UK, where Canadian pensions are already active.
The Canada Infrastructure Bank, launched in 2017 with a goal of matching every government dollar with $3 to $4 of private capital, has fallen short.
A 2022 report by a House of Commons standing committee recommended abolishing the bank.
The Parliamentary Budget Officer recently estimated the bank would disburse $14.9bn in 2027–28 — less than half of its $35bn target — though it noted that the $1bn goal for Indigenous investments has already been met.
Betermier argued that for Canada to emulate models like the UK’s, governments must actively commit to private-sector involvement in infrastructure. He cited examples like the European Union’s InvestEU, which uses loan guarantees to manage risk and attract investment.
In contrast, Canada’s infrastructure bank model requires private partnerships in place before a project can proceed, reducing flexibility.
The Caisse’s investment strategy reflects a broader shift. In 2021, it pledged to divest entirely from oil producers.
In May, CEO Charles Emond told Financial Times that the fund plans to increase its UK exposure by 50 percent, deploying more than £8bn in the coming years.
Emond cited the “clarity” of the UK’s business environment, its “ability to execute deals” and “welcoming approach” to investors.
While the UK continues to pursue institutional capital with policies aimed at de-risking infrastructure investments, Canada appears to be recalibrating its approach.
Prime Minister Mark Carney has proposed $150bn in public spending to unlock $500bn in private investment over five years in areas including transportation, defence, housing, digital innovation, and energy.
The platform aims to spur private-sector involvement, though Betermier noted that progress will depend on clear coordination and commitment.
Brookfield Asset Management was also rumoured as a potential Sizewell C investor, according to Reuters, though no final confirmation was provided.
The firm, like the Caisse, has a significant history of infrastructure investments abroad.
The Sizewell C deal suggests that Canadian pension funds are willing to commit billions — when the right conditions are in place.
The challenge remains whether similar investment structures and opportunities can be created at home.
