PSP's CEO on What Comes After the Canada Investment Summit

Today, PSP Investments posted this on LinkedIn on a recent discussion between CEO Deborah Orida and Goldy Hyder at the Canadian Club Toronto:

The inaugural Canada Investment Summit focused the attention of global capital and gave Canada a podium to make its case to the world. What comes next?

This question was at the heart of a fireside conversation between our President and CEO Deborah K. Orida and Goldy Hyder, President and CEO of the Business Council of Canada, at Canadian Club Toronto on Thursday.

From infrastructure and airports to structured financing and infrastructure credit, Deb shared PSP Investments’ perspective on the opportunities we see in Canada, drawing on examples of how we are putting capital and expertise to work and leveraging our global experience locally.

I am not going to go over the entire discussion but jump right into minute 21 after Deb said "the opportunity is not Canada instead of the US" but to think about Canada "as a seperate destination": 

Goldy Hyder: Well, one of the things we've heard about Canada is that we didn't have projects and now we have this long list of projects. What did you hear about that in terms of response from investors? Because you know, you know better than anybody that's going to a conference is nice, but by the time you get to the stage to actually invest and deploy capital, that process, how do you see this evolving now that people have attuned into Canada and the opportunities that we have for them with or without access to other markets?

Deb Orida: Well, maybe I'll just also take this moment to thank my partners at at CPP and my team for all the work, and our partners at the PMO for all the work that they did around the summit.

You know John (Graham) and I talked about it and given that in some ways give the with the barbell the people at this end (Blackstone's) Jon Gray does not need to know more about Canada. He knows a lot about Canada.

The target was a little bit these people who were just realizing that Canada is a separate investment destination that they are underallocated Canada when they look at it as a separate destination and to bring them along the journey. And as you know you don't typically start your journey going it alone in a you know big development project. You might start by allocating more capital to Canada in the public equities and then you might start to go from there to thinking about what kind of investment managers or partners you want to use that might be available to help you access that geography and then you start moving into private investing.

And so one of the things that didn't get that much um attention in the press in the lead-up to the summit was that the deal book that you referred to was just one source of information at the summit. There was with Alison's (Loat) help a a detailed uh book of Canadian of investment managers in infrastructure, private equity, venture capital, and clean tech. There was there was research put out by the banks about the Canadian public companies and the opportunities to invest in the big themes for Canada: energy, critical minerals, our innovation economy.

And then at the summit itself, there were hundreds of bilateral one-on-one meetings where, in a one-on-one meeting, you can talk about confidential investment opportunities that you might not put in a book that's going out to 200 people.

Goldy Hyder: So, one of the things that did get publicly said, however, was this indication that we are going to privatize and it's really concessions. It's not you're not going to own the airport. You can talk about that in the answer to the question, but that just was just put out there. It's fair to say the public was not as embracing of the notion. Perhaps because there wasn't a lot of preconditioning beforehand. Perhaps they miss owning gas stations and airlines and train stations as we did once upon a time. I don't know. But they suddenly recoil, oh, I don't know if I want the airport to be owned and operated by somebody. Where are we in that privatization process? What needs to happen so that investors are able to, including obviously Canadian pension plans but beyond that, acquire assets that may be in public hands today?

Deb Orida: Well, maybe I'll go back to the lead-in to your question, which is the public reaction. PSP is not only an airport investor but we also own an operating platform called AviAlliance that owns seven airports around the world and last year serviced 95 million passengers. And from that ownership we've learned a couple of things.

One is that a successful airport investment requires working with multiple groups of stakeholders, including of course, your customers, your employees, the community, and the regulators.

The second is that a successful airport investment has happy customers. In the airports that we own, we have won customer service awards and the management team of AviAlliance is incredibly proud of that, particularly the ones that are awarded based on customer surveys because if you own a restaurant and you don't have happy customers, you don't have a successful restaurant. An airport has differences clearly, but one of the things we've learned is that happy customers is a precondition or a necessary condition to returns.

And then finally, what we've learned is that in airports there is opportunity to add value and that doesn't have to be from raising fees or uh cutting employment.

An airport is like many fixed assets, the way that you maximize returns or increase the value of it is to increase the utilization. So you want to start with making it as efficient as possible. And so, for example, if you can make this, and this is from work that we've done in some of the airports that we've owned, bring in best practices for security clearance so that you're not wasting time waiting in line and we can increase the capacity of the airport to process passengers. And then you can bring in more routes and so the customers have more choices, more places that we can go to directly from Toronto or Montreal.

And then finally there's the opportunity to add value through other things that the customers want. So one of the airports that is in the AviAlliance portfolio is Athens and I went there a couple of summers ago and as I'm about to get on the plane of course, I think oh I would like to have some Greek souvenirs. And right by my gate magnets here I come. Right by my gate there was a store selling olive oil soap and Greek things that I was that I wanted to buy. And the CEO of AviAlliance always says the important thing about retail in the airport is know what the people want to buy when they're about to get on the flight. Um, and I think there might be opportunities to know what people want to buy when they're about to get on the flight. And I think there might be opportunities to do things like that that create value and increase returns without increasing fees. 

Alright, there is a lot more but I am not going to transcribe the rest here, take the time to watch the clip where you'll gain more insights. 

Below, watch Deborah K. Orida, President and Chief Executive Officer of PSP Investments, and Goldy Hyder, President and Chief Executive Officer of the Business Council of Canada for a timely conversation about Canada’s investment moment and what comes next.