Poloz: Path emerges for pensions to invest in Canadian airports

Canada’s largest pensions have collectively invested billions of dollars in airports around the world and could ultimately do the same in Canada, says Stephen Poloz, the former Bank of Canada governor appointed to help the federal government get such funds to deploy more of their investment dollars inside the country. “I do think there’s a path,” he said, adding he believes pension involvement in Canadian airports could start almost immediately with investments in “adjacent” assets such as parking garages and freight services as well as new developments like sustainable aviation fuel facilities that aren’t core to the business of an airport. Under existing rules, Poloz said such standalone ancillary assets and services could be put in special purpose vehicles (SPVs), with the pension funds as “obvious” investors. “It could be something new on a vacant piece of land,” he said. “And all they need then … is a deal for how much rent goes to the government and how much remains for the equity holders of that SPV.” If the government agrees with Poloz’s assumptions, it could pave the way for a second phase that would require rule changes and legislation to allow direct investments in the country’s airports by pensions, replicating the type of investments large funds such as the Ontario Teachers’ Pension Plan have made in Europe and the United Kingdom. Teachers’ in 2020 boasted it was the largest private investor in European airports, with stakes in airports in London, Bristol and Birmingham, U.K., Brussels and Copenhagen, though its stake in the latter was sold this year.<br/>