NZ Super Fund, CDPQ Infra lob unsolicited bid to invest in Auckland light rail project

The New Zealand Superannuation Fund and Canadian fund manager CDPQ Infra have made an unsolicited bid to build and operate two lines in the proposed Auckland light rail, which are already getting $1.8 billion of seed investment.

The government-owned fund manager and Caisse de dépôt et placement du Québec subsidiary approached the government with an offer to assess the viability of the rail project for commercial investment and is open to other partners joining a consortium, it said in a statement.

Cabinet has agreed to launch a procurement process exploring possible procurement, financing and project delivery options. The project attracted $1.8 billion of seed investment in the government and Auckland Council's recently announced 10-year transport plan for the city, because of the "potential opportunities for leveraging funding and financing arrangements to progress light rail", the report said.

"The government will not be commenting further on the proposal other than to say that we welcome the strong interest in light rail and acknowledge that any investors will require a reasonable commercial return," Transport Minister Phil Twyford said in a statement. "The procurement process agreed by Cabinet will review all other proposals in the same way as the Super Fund’s proposal is assessed."

The NZ Super Fund has invested about $5 billion of its $38 billion portfolio in New Zealand, and has indirectly invested in public-private partnerships in the past via the Morrison & Co-managed Public Infrastructure Partners Fund. The Accident Compensation Corp investment vehicle has been more active in the PPP space.

"We consider the Auckland Light Rail network to be an infrastructure project of sufficient scale and significance to be an attractive prospect for investment," NZ Super Fund acting chief executive Matt Whineray said in a separate statement. "We wish to explore whether a NZ Super Fund-led consortium leveraging our international relationships can fund and deliver the project, on a fully commercial basis."

CDPQ Infra develops and operates infrastructure projects, and its parent CDPQ is one of Canada’s leading institutional fund managers with US$238.2 billion in net assets. CDPQ Infra is responsible for developing, building and operating Montreal’s 67-km light rail network.

Finance Minister Grant Robertson said the New Zealand Transport Agency will run the procurement process, inviting and assessing all potential proposals, before reporting back to him and Twyford.

The Auckland Transport plan puts the light rail project among an $8.4 billion spend over the next decade to develop repaid transport, including busways and rail. The city-to-airport light rail component identified the need for "a substantial increase in public transport capacity and efficiency" to avoid eroding Auckland's productivity with increased travel times and freeing up access to employment areas, while the northwest line was seen as more expensive than a busway but "a longer-term solution to bus congestion in the city centre and is likely to support stronger land-use change".

The project is identified as an opportunity for PPP investors in the trans-Tasman industry body Australia & New Zealand Infrastructure Pipeline website, which puts a $1.2 billion (A$1.09 billion) value on the project. The website is sponsored by government agencies on both sides of the Tasman.