A company controlled by the Canada Pension Plan Investment Board (CPPIB) has acquired a 10 percent equity stake in 407 International, which holds a concession over the 407 Express Toll Route (407 ETR), from SNC-Lavalin Group.
Upon completion of the transaction, CPPIB controls a total 50 percent stake in 407 International.
Located in Ontario, Canada, 407 ETR is the world's first all-electronic, barrier-free toll highway, stretching 108 kilometers (67 miles) and serving more than 400,000 drivers each weekday.
Under the terms of the agreement, CPPIB agreed to pay $3 billion to SNC-Lavalin on closing, with an additional $250 million set to be paid over 10 years, conditional on achieving certain financial targets related to the performance of the toll highway.
CPPIB has been an investor in 407 International since 2010, when it acquired control of a 40 percent holding in the business through two separate transactions
"CPPIB invests in global infrastructure assets that offer predictable, resilient income streams in attractive locations,” said Scott Lawrence, managing director and head of infrastructure at CPPIB. “Toll roads provide CPPIB the opportunity to benefit from urbanization trends and invest in assets that benefit from the growth of a region."
He added, "The 407 ETR continues to be an attractive infrastructure investment for all these reasons, and remains a good strategic fit with CPPIB's portfolio and exceptionally long investment horizon."
CPPIB has a diversified, global portfolio of infrastructure assets and makes direct investments through many of its nine offices worldwide. CPPIB's Infrastructure group is focused on investing in quality, large-scale core opportunities with dependable, like-minded partners.