IFM's push to bring Maple Eight infrastructure capital home hinges on persuading Ottawa, says Gian-Carlo Peressutti
Earlier this year, nine Australian pension giants and Canada's Maple Eight signed a Memorandum of Understanding (MoU) to move billions into Canadian infrastructure after Prime Minister Mark Carney spent months telling institutional investors to bring capital home.
Whether the Canada-Australia Pension Pact - known formally as the CAP Invest Initiative - can move real dollars into Canadian assets depends on mechanics that are still being worked out. At the centre of that effort is IFM Investors, a A$230-billion Australian fund manager owned by a consortium of industry super funds, which has been tapped by its owners to lead the charge.
Asset recycling model is key for CAP Invest Initiative
While Canadian pension funds are notably looking to see whether the initiative can convert political momentum into deployable capital, Gian-Carlo Peressutti, executive director, public affairs at IFM Investors, said the firm has reason to believe it can.
“We have evidence to suggest that when different countries took a similar approach, good things have happened,” he said, pointing to public-private partnerships in the US and asset recycling programs in Australia as proof that pension capital can flow into public infrastructure without governments losing control of it.
The pitch to Ottawa centres on a similar asset recycling model where a private investor takes on a pre-existing infrastructure asset, injects capital expenditure, grows its revenues, and the government either shares in that revenue growth or takes an upfront payment for the right to manage the asset over a long period. That cash is then redirected to other infrastructure priorities sitting in the government's pipeline.
According to Peressutti, in the vast majority of IFM's deals, the government retains full ownership and leases the asset to a custodian for a fixed period. But the model works best, he noted, when local stakeholders have a governance role - as they do at Manchester Airports Group in the UK and on the Indiana Toll Road in the US, where the Indiana Finance Authority represents state and citizen interests.
"We view it very much as a partnership, but we are fully cognizant and adherent to the fact that this is and always will be the government's asset and we are not its owners, we're its custodians," he said.
Privatization debate shadows Pension Pact
Yet Peressutti was quick to underscore how critics have been quick to label the approach as privatization, particularly as Canada debates whether assets like airports should be opened to private investors.
"Our adversaries will throw that word around during the course of the debate that Canada is now having about whether or not this makes sense for assets such as airports. But it's not a privatization," he said.
Next step is to persuade Carney government
The concrete factor that will turn the initiative into real dollars is persuasion, Peressutti suggests. All parties involved in the MoU will need to convince both the Canadian public and the Carney government that the deal stacks up.
If the process moves forward, he suggests there will be no shortage of capital or competing bidders for Canadian assets, but argued IFM's track record of trust, experience and results with governments gives the firm an edge. He emphasized IFM's nine Australian superannuation fund owners who have long relied on the firm to lead government engagement efforts around the world.
Canada is not the first time it has played that role. Notably, IFM has run similar infrastructure-focused initiatives in Australia, the UK, and the US, positioning itself as the coordinating body that opens doors with policymakers on behalf of pension capital.
For now, IFM's Canadian ambitions are squarely in infrastructure. While Peressutti would not rule out a broader asset mandate down the line, he believes “there are plenty of infrastructure assets that we believe are attractive in Canada so that will be our focus," he said.
The goal, Peressutti suggests, is to ultimately persuade Ottawa to open public infrastructure assets to long-term private capital. If that happens, the cooperative tone of the working group will shift fast.
"Our partners in the MoU may become our adversaries when it comes to bidding on the individual projects. And you know, that's as it should be. That's what the free market and capitalism is all about," he said, noting at that point, the government would choose whichever partnerships it believes will deliver the best value for Canadians.
Why IFM values Maple Eight partnership
Peressutti said IFM sees pension capital as fundamentally different from other forms of private investment - patient, long-duration money backed by a business model built around holding and stewarding assets for decades rather than flipping them. That long-term orientation is what drew the UK's Nest, now IFM's only non-Australian owner, into the fold roughly a year ago, and it is the same quality Peressutti said IFM recognized in the Maple 8.
"We’re looking to partner with the Maple 8 in ways that we have in the past. We feel that we're aligned in terms of our investment approach, in terms of our social values, in terms of the mandate that those that invest in us expect, namely public pension funds,” added Peressutti. “We have both the social and investment alignment with the Maple Eight. If you start from that position, looking at Canada, looking at the mandate that Prime Minister Carney announced in terms of needed investment in the country, we thought it made all the sense in the world to codify our relationship and form this Canadian Australian pension fund initiative, sign the MoU on the occasion of the Prime Minister's visit to Sydney back in March and to look forward to a very favorable investment climate in Canada and see if we can't turn that partnership into meaningful investments.”
While the MoU's specific terms remain confidential for legal and competitive reasons, Peressutti was candid about what the initiative amounts to on a day-to-day basis, pointing to a public education campaign designed to build a market that does not yet exist.
Despite Peressutti not able to offer a firm timeline of when to expect meaningful progress, he pointed to the upcoming federal investment summit the Prime Minister is hosting in mid-September as the moment that matters. Ottawa has invited the world's top investors to attend, and Peressutti said the signals from the government suggest it wants more than pageantry.
"It's clear that the government doesn't want this to just be a show and tell and a series of speeches and panel discussions. They want action, they want deals, they want progress on deals. Speaking for IFM, that's music to our ears," he said.
