CDPQ's First Investment in Chile's Ports

Caisse de dépôt et placement du Québec (CDPQ) has acquired a 45% stake in DP World Chile, which operates terminals in Puerto Central and Puerto Lirquen, serving Chilean consumption and industrial centers. This is CDPQ's first infrastructure investment in Chile and the transaction will be executed at the same price as DP World’s acquisition of the asset in April 2019:
Two years ago, CDPQ partnered with DP World to create a US$3.7-billion platform to invest in ports and terminals globally. DP World holds 55% of the platform and CDPQ holds the remaining 45%. The two new assets in Chile join a portfolio of ports, which includes terminals in Vancouver and Prince Rupert in Canada, that are already owned by the platform.

“This is our first infrastructure acquisition in Chile and our first Latin American ports. It marks an important step in the growth of our platform with DP World and aligns well with its geographic diversification objective,” stated Emmanuel Jaclot, Executive Vice-President and Head of Infrastructure at CDPQ. “We are delighted to continue working alongside DP World, a strategic partner for CDPQ that has a long track record in the port business and provides us with access to high-quality investment opportunities.”
DP World is a leading enabler of global trade and an integral part of the supply chain. Container handling is the company’s core business and generates more than 50% of its revenue.

The company has long-standing relationships with governments, shipping lines, importers and exporters, communities, and many other important constituents of the global supply chain.

In 2018, DP World handled 71.4 million TEU (twenty-foot equivalent units) across their portfolio. With its committed pipeline of developments and expansions, the current gross capacity of 91.2 million TEU is expected to rise in line with market demand.

This is another long-term infrastructure deal where CDPQ will benefit from growth in Latin America. Recall, CDPQ signed deals to co-invest in Colombia's infrastructure, so this is another exciting opportunity to invest in Chilean infrastructure.

In my discussion with Mark Machin yesterday, he mentioned an infrastructure investment CPPIB made in Chile back in 2006, Transelec S.A., the country's leading electrical transmission company.

In 2007, Ontario Teachers' Pension Plan (OTPP) made its first infrastructure investment in Latin America with the acquisition of stakes in two Chilean water companies.

In this regard, CDPQ is playing catch-up to its peers which invested in Chile early on.

Chile is a success story, an economic powerhouse and one of Latin America’s most stable nations, so it's not surprising that Canada's large pensions are attracted to its infrastructure assets.

More recently, the Chilean economy has slowed but its long-term outlook remains positive.

Reuters reported last month that Chilean President Sebastian Pinera attended an investment forum in China where he told its leaders: “We want to transform Chile into a business center for Chinese companies, so that you can, from Chile, reach out to all of Latin America.”

If President Pinera's vision plays out, Chile's ports will see significant growth in activity in the decades to come, and CDPQ's beneficiaries will be directly invested in this growth.

In other related CDPQ news, take the time to read this Reuters article on how Ivanhoe Cambridge invested $1 billion in a platform called ARK and The We Company. "WeWork is at the forefront of a structural shift in how real estate is bought, leased and consumed that will leave behind the landlords and investors who ignore the disruption," said Jonathan Pearce, executive vice president at Ivanhoe Cambridge.

Below, a short clip introducing DP World and why it's a global leader in container handling. Also, DP World recently bought a majority stake in the Chilean port services firm Puertos y Logistica, PULOGSA, a move that will give it exposure to several terminals in Chile.

Lastly, WeWork's Adam Neumann talks with Connie Loizos about building operating systems for buildings, selling services, and building partnerships.