A Partner to Invest in New Infrastructure · REM Project transit Sector X Urban Rural Northern...

CONFIDENTIAL

www.cib-bic.ca

January 2020

A Partner to Invest in New Infrastructure

2

What We Do

www.cib-bic.caCanada Infrastructure Bank | Banque de l’infrastructure du Canada 3

A centre of infrastructure investment expertise

Invest

$35B to attract additional private and institutional

capital into projects

Develop

knowledge, research, data, information

Advise

public sponsors on project

development and innovative investment

options


Four priority sectors with minimum investment targets

Green Infrastructure Trade and TransportPublic Transit Broadband

Green infrastructure projects

support Canada’s ongoing

transition to a clean growth

economy. Examples of potential

projects include renewable

power, water services and

wastewater treatment, electricity

transmission (interties)

and district energy.

Transit infrastructure projects

improve commute times, cut air

pollution, strengthen communities

and grow Canada’s economy.

Examples of potential projects

include light rail transit, subways,

tramways and bus rapid transit.

Trade and transport infrastructure

projects help build stronger, more

efficient corridors to domestic and

international markets, and help

Canadian businesses compete

and grow. Examples of potential

projects include ports, freight and

passenger rail, highways, all-

season and resource roads,

bridges and tunnels.

Broadband infrastructure helps

increase Canadians’ high-speed

connectivity in unserved and

underserved communities.

www.cib-bic.caCanada Infrastructure Bank | Banque de l’infrastructure du Canada

▪ Acting as a centre of expertise

▪ Advising all levels of governments

▪ Structuring proposals and negotiating

agreements

▪ Investing in infrastructure projects

▪ Receiving unsolicited proposals

▪ Collecting and disseminating data

▪ Fostering evidence-based decision making

5

Taking action to advance infrastructure investment


▪ We play an active advisory role with public sector project sponsors

▪ Increase awareness regarding innovative investment and financing models

▪ Assess, at no cost to project sponsors, revenue generating project proposals

▪ Build relationships with the market through tools such as market soundings to determine private

sector interest

▪ Evaluate the public interest and bankability of projects

▪ We offer specialized commercial and investment expertise

▪ Structuring debt, equity, loans and hybrids

▪ Complex financial modeling

▪ Financial advisory

▪ Project structuring and procurement options

6

Advisory, project development and investment expertise


▪ Members of our in-house investment team have

worked for major banks, infrastructure and

investment firms and bring experience from large

transactions in Canada and around the world in

sectors such as:

▪ Power and renewables

▪ Public transportation

▪ Roads and toll roads

▪ Rail and light rail transit

▪ Ports

▪ Water and wastewater

▪ Broadband

7

In-house expertise


August 22, 2018

8

Announcements

May 30, 2019 June 25, 2019 July 15, 2019

Up to $2 billion

(GO Expansion)

Up to $55 million

(High Frequency Rail)

$1.283 billion

(Transit)

Up to $20 million

(Water and Wastewater)

Memorandum of Understanding

(District Energy)

Up to $300 million

(Contrecoeur Port)

December 4, 2019August 1, 2019 August 28, 2019

Advisory Engagement

(Hydroelectricity Expansion)


(Pirate Harbour Wind Farm)

December 17, 2019


Timeline showing momentum

August 2018

▪ Réseau express

métropolitain

(REM): $1.28

billion investment

in Montreal transit

project

May 2019

▪ GO Expansion –

On Corridor: Up

to $2 billion

investment

commitment to

Metrolinx / IO

transit project

June 2019

▪ VIA Rail High

Frequency

Rail: $55 million

commitment for

planning and

pre-procurement

July 2019

▪ Mapleton Water

and Wastewater:

Up to $20 million

investment

commitment to

Township’s project

August 2019

▪ Lulu Island

District Energy:

Memorandum of

Understanding

with City of

Richmond

August 2019

▪ Contrecœur

Port Terminal:

Memorandum of

Understanding

with the Montreal

Port Authority

August 2019

▪ Taltson

Hydroelectricity

Expansion:

Advisory work with

the Government of

Northwest

Territories

December 2019

▪ Contrecœur

Port Terminal:

Up to $300 million

investment

commitment with

the Montreal Port

Authority

December 2019

▪ Pirate HarbourWind Farm: Memorandum of Understanding


Reduction of greenhouse

gases

Clean and renewable

energy

Clean, safe water and

wastewater treatment

Potential Green Benefits

of Projects

Pirate Harbour

Wind FarmGO Expansion

Green and sustainable infrastructure


Building a pan-Canadian portfolio of projects

REM

Project

transit

Sector

X

Urban Rural Northern Advisory MOU

X

Investment

GO Expansion transit X X

VIA Rail transport X X X

Mapleton green X X

Lulu Island green X X

Contrecœur trade X X

Taltson green X X

11

Pirate Harbour green X


▪ Expertise allows the CIB to play an active advisory role with public sector sponsors to assist them

bringing forward project proposals for potential CIB investments

▪ Focus is on investing and being a catalyst for new transformational infrastructure

▪ Investment fills the gap in capital structures for new projects

▪ CIB has flexibility to invest across the capital structure and brings a disciplined investing approach to

projects, including appropriate risk transfer

▪ Project investment decision-making and oversight by the CIB Board of Directors

▪ Complementary to and distinct from existing government departmental programs that invest in

infrastructure through grants and contributions

12

Advantages of the CIB approach


The Minister’s Statement of Priorities and Accountabilities provides direction on the CIB’s overall goals.

CIB’s governance system for accountability and transparency includes:

▪ Board of Directors

▪ Corporate Plan, Annual Report and Quarterly Financial Reports

▪ Disclosure related to Privacy, Expenses, Access to Information

▪ Annual audit and other required reviews

▪ Appearances before Parliamentary Committees

13

Our commitment to accountability and transparency


How We Partner


▪ Partner with governments on their priority projects

▪ Invest to fill financing gap in projects

▪ Focus on new revenue generating projects in priority sectors

▪ Attract new private capital to infrastructure projects

▪ Transfer appropriate risk to the private sector

▪ Structure terms to drive private sector performance

▪ Align risk with reward

▪ No sales of existing assets

15

How we work with our partners


CIB influence on private investment and risk transfer

16

Design Bid Build

(DBB)

Design Build

(DB)

Design Build

Finance

(DBF)

Design Build

Finance Maintain

(DBFM)

Design Build

Finance Operate

& Maintain

(DBFOM)

DBFOM with

Revenue/Usage

Risk Transfer

Financing

Public

Private

CIB

Risk Allocation

Design

Build

Maintain

Operate

Revenue/usage

Public Public Public Public Public Public

Private

(short-term)

Private

(long-term)

Private

(long-term)

Private

(long-term)

CIB Financing CIB Financing CIB Financing

Public

Public

Public

Public

Public

Public

Public

Public

Public

Public

Public

Public

Public Public

Private

Private

Private

Private

Private

Private

Private

Private

Private

Private

Private

Private

Private

Private

Private

Private

Public-Private Partnership Models

Increased Private Sector Financing

Increased Risk Transfer to Private Sector


Project process flowchart

Intake AppraisalFormal

Engagement

Investment

Structuring &

Commitment

Final

Negotiation &

Closing

Funding,

Monitoring &

Exit


Appraisal of potential advisory/investment mandates

Public

sponsor?

Long-term

private

sector risk

transfer?

Estimated

capital cost?

Potential project for

CIB advisory and/or

investment

commitmentLikely

outside of

CIB’s

mandate

Yes

Small

and

one-off

Small -

potentially

replicable

Large

No Yes No

YesSector?

Transit

Trade and

Transport

Green

Infrastructure

Broadband

Other

Aligned with

government

policy

objectives?

No

No

Capable of being

financed

completely

commercially?

NoPotential to

generate

revenue?

Potential to

attract

private

capital?

Yes YesNew

and in

Canada?

Yes

No

Yes

No

Note: projects not satisfying all criteria may still be

considered in certain circumstances.


▪ Does the project have a public sponsor?

▪ Does the project fall under one of the CIB’s priority sectors?

▪ Does a financing gap exist in the project without the CIB’s involvement?

▪ Is the project capable of generating material revenue?

▪ Is there a reasonable probability of being able to attract private capital to the project?

▪ Does the project transfer risk to the private sector throughout the project lifecycle?

▪ Is the project transformational?

▪ Does the project have the potential to be replicated in other Canadian jurisdictions?

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Key questions for project sponsors to consider


How We Innovate


Investment approach is flexible and customized

▪ No grants

▪ Investment: 0% to market

pricing

▪ Pricing below commercial

rates is customized to each

project

Structure

▪ Debt or equity investment

▪ Senior/preferred or

subordinated

▪ Long term or short term

Instruments

▪ Protect investment, allow

sponsor and proponent to

manage project effectively

▪ Allocation of risks and

alignment of interests between

all parties

Terms


Green Infrastructure

Project Opportunities

▪ Renewable power, especially for

remote and Indigenous

communities

▪ Municipal and Indigenous water

and waste water

▪ Transmission projects including

interties

▪ District energy

Innovative models that help

transfer long-term risk

▪ Merchant power generation

▪ Merchant transmission


Public Transit


▪ LRTs, subways, tramways

▪ Bus rapid transit

▪ Flexibility for extensions and

expansions

▪ Transit Oriented Development

Innovative models transfer

long-term risk

▪ Operations risk

▪ Integration risk

▪ Revenue risk, where possible:

▪ Partial availability payments

▪ Volume risk transfer


Trade and Transportation


▪ Ports

▪ Freight rail

▪ Passenger rail

▪ Highways

▪ All-season roads

▪ Resource roads

▪ Bridges and tunnels

Innovative models help

transfer long-term risk

▪ Long-term integrated concessions

transfer responsibility to build and

operate (BOTs) for ports and rail

▪ Toll roads and shadow toll roads


Commitment to invest a minimum of $1 billion in broadband over the next 10 years.

– Budget 2019, Government of Canada

25

Broadband

▪ Increase high speed broadband access for Canadians in unserved and

underserved communities

▪ Innovations that facilitate the transfer of long-term risk in the following

models:

▪ Traditional (grant programs)

▪ Public Subsidy (competitive procurements based on lowest subsidy

requested)

▪ Public-Private Partnerships


Connect in-person or online

Learn: www.cib-bic.ca

Follow: twitter.com/cib_en

linkedin.com/company/canada-infrastructure-bank

Inquire: [email protected]


Appendix – Our announced projects


Project highlights

Réseau

express

métropolitain

Urban public

transit

Priority

Sector

Investment

Commitment

CIB

Engagement

$1.28B ($6.3

billion total

project capital

cost)

CIB

Commitment

Province of

Quebec

Public

Sponsor

Job creation,

green house gas

reduction, lower

congestion

Policy Goals

Yes – fare box

Revenue

Generating

Yes – CDPQ

investment

Private

Investment Role

Yes

Risk Transfer to

Drive Performance

GO Rail

Expansion

Regional

transit

Investment

commitment

prior to RFP

Up to $2B

(estimated $12

billion total

project capital

cost)

Province of

Ontario,

Metrolinx

Expanded

access to two-

way all-day

regional transit

for 200 million

trips per year

Yes – fare box Design-build-

finance-operate-

maintain model

selected by

Metrolinx

Yes

VIA Rail

High

Frequency

Rail

Planning and

pre-

procurement

activities

$55 million Transport

Canada, VIA

Rail

Faster,

expanded and

more frequent

service to

communities on

corridor

Yes – fare box To be confirmed

during planning

and pre-

procurement by

joint project

office

To be confirmed

during planning and

pre-procurement by

joint project office

Township of

Mapleton

Rural

municipal

water and

wastewater

Investment

commitment

after RFQ and

pre-RFP

Up to $20

million

(estimated $30

million total

project capital

cost)

Township of

Mapleton

Expanded clean,

safe, affordable

public water

system

Yes – regulated

water rates set

by Township

Yes –

consortium

equity

investment

Yes – contract with

performance

requirements

28

Montreal

metropolitan

region

Location

Greater

Toronto

Hamilton

Area

Quebec City

to Toronto

corridor

Mapleton

(ON)


Project highlights (cont’d)

Lulu Island

Energy

District

energy

Priority

Sector

Memorandum

of

Understanding

CIB

Engagement

Memorandum

of

Understanding

CIB

Commitment

City of

Richmond

Public

Sponsor

Green,

renewable

energy for

municipality

Policy Goals

Yes – district

energy users

Revenue

Generating

To be confirmed

through due

diligence

Private

Investment Role

To be confirmed

through due

diligence

Risk Transfer to

Drive Performance

Contrecoeur

Trade and

transportation

Memorandum

of

Understanding

Memorandum

of

Understanding

Port of

Montreal

Economic

growth through

import and

export

Yes – port

operations

To be confirmed

through due

diligence

To be confirmed

through due

diligence

Taltson

Hydroelectricity

Green

Infrastructure

Advisory

Engagement

Advisory

Engagement

Gov’t of

Northwest

Territories

Clean, power via

hydroelectric

plant

Yes To be confirmed

through due

diligence

To be confirmed

through due

diligence

Pirate

Harbour

Green

Infrastructure

Memorandum

of

Understanding

Memorandum

of

Understanding

Nova Scotia Green power Yes To be confirmed

through due

diligence

To be confirmed

through due

diligence

29

Richmond

(BC)

Location

Montreal

Northwest

Territories

Nova Scotia


Réseau express métropolitain (REM)

Risk

Transfer and

Affordability

Benefits

Structuring

▪ CIB: $1.283 billion

▪ 15 year loan, 1-3% interest

▪ CDPQ: $2.961 billion

▪ preferred equity

▪ 8% preferred return

▪ Government of Quebec: $1.283

billion

▪ non-voting subordinated equity

▪ CIB role improved risk transfer to the

institutional investor (CDPQ Infra)

▪ CIB concessional investment

improved project affordability

▪ CIB load instead of traditional grant


GO Rail Expansion – On Corridor

▪ New, transformational project in the Greater

Toronto and Hamilton Area

▪ Low-interest financing to proponents balanced

with risk transfer to the private sector

▪ Funding commitment supports CIB’s mandate to

invest in transportation

▪ Partnering with Metrolinx and Infrastructure

Ontario who are leading competitive procurement

process

▪ Optimizing risk transfer and crowding-in more

private capital than originally planned

Up to $2 billion


▪ New, transformational project benefitting those

in the Quebec City to Toronto corridor

▪ Funding commitment supports CIB’s mandate

to invest in public transit

▪ Partnering with VIA Rail and Transport Canada

on pre-procurement and de-risking activities

▪ Bringing expertise in infrastructure and financing

to support planning work during 2019-2021

32

VIA Rail Canada – High Frequency Rail

Up to $55 million


▪ CIB’s first investment in green infrastructure

▪ The project will expand access to safe drinking

water and capacity for the treatment of

wastewater for up to 20 years

▪ Mapleton will continue to own all existing and

new infrastructure assets

▪ A pilot project to demonstrate new models for

structuring and financing smaller municipal water

and wastewater infrastructure projects

33

Township of Mapleton – Water and Wastewater

Up to $20 million


▪ First opportunity in district energy

▪ City to expand its clean, renewable district

energy system from 3 million square feet to 50

million square feet

▪ City of Richmond will own all existing and new

infrastructure assets

▪ Consistent with CIB mandate to advise on and

invest in green infrastructure projects

34

Lulu Island Energy Company – District Energy



Contrecœur Port Terminal

▪ First investment in trade-related project

▪ Montreal Port Authority’s new terminal will enable

importers and exporters to get products to

market quicker supporting Canada’s economic

growth and international trade

▪ $300 million investment commitment, following

the Memorandum of Understanding

Up to $300 million


▪ Advisory engagement to develop project’s

business case

▪ First opportunity in hydroelectricity and in

Northwest Territories

▪ Proposed expansion of the existing Taltson

generating station by constructing a new 60

megawatt, clean energy hydroelectric facility

and 270 kilometres of transmission lines



36

Taltson Hydroelectricity Expansion

Advisory engagement


Pirate Harbour Wind Farm


▪ First opportunity in Nova Scotia

▪ Potential development of a 112 megawatt wind

farm, with 28 four megawatt wind turbines, 15

kilometres of overland transmission lines and two

kilometres of subsea cables

▪ Project would add clean, renewable energy

generation and reduced greenhouse gas

emissions



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