In a matter of weeks, we might find out just how eager Mark Carney really is to sell off our airports.
We should also get a better sense of which other Canadian assets foreign investors want.
That is, if we’re able to peek behind closed doors as top figures in global finance gather in Toronto, for what could be a defining moment in Carney’s attempts at nation-building.
The Canada Investment Summit, taking place on Sept. 14 and 15, has flown under the radar for many Canadians since the Prime Minister announced plans for it last spring. But that certainly hasn’t been the case on Bay Street.
The buzz, in those circles, mostly seems positive. Although the guest list hasn’t been made public, the chatter is that Carney is successfully leveraging his international credibility to attract roughly 100 leaders of sovereign wealth funds, investment firms and pension giants from Asia, the Middle East, Europe, Australia and (yes) the United States.
There’s also speculation that, to show momentum, the government will use the summit to unveil a few specific new commitments by foreign investors.
But it will be more telling when Carney finally opens up his investment book, a showcase of investment-ready projects and assets that the PM is believed to be preparing.
Once the potential investments are unveiled, we might get an answer to an overarching question: Will foreign investors help build things in Canada that domestic investors won’t, or are we just talking about transferring ownership of what we already have?
There’s some irony to the fact that the summit will be co-hosted by the Canada Pension Plan Investment Board (CPPIB) and the Public Sector Pension Investment Board.
CPPIB, in particular, has been a source of frustration for politicians who want Canada’s pension giants to keep more of their capital within this country.
The folks doing the investing for the pension plans tend to reply that there aren’t enough investment-ready opportunities here, at least not at the lower risk levels they can responsibly take on while minding Canadians’ retirement savings.
So the hope is that Carney can produce a list of credible prospects — mines, energy projects, new export capacity, and the like — that deep-pocketed visitors to Toronto prove more enthusiastic about.
It’s not a crazy prospect. Foreign investors might have a higher risk tolerance, because of different client bases or a willingness to take on more exposure in Canada, especially if they feel over-leveraged in the increasingly unstable United States. Some of them might specialize more in infrastructure than the domestics, too.
Those kinds of factors could make them more open to equity in greenfield projects — building things anew, rather than taking over existing assets. Or, if they do want in on existing assets, they could be underperforming ones in need of serious expansion or modernization (ports being one possible example).
Not that the only potential benefit is around infrastructure, although that seems to be the summit’s main focus. There are plenty of innovative, early-stage companies in this country that aren’t finding much love from Canadian investors.
Much less useful, though, would be Canada selling off things that don’t really need a foreign cash infusion. So it would be helpful if, before the summit, Carney could lay out to Canadians which forms of investment he believes are in our interests, which aren’t, and why.
That brings us back to the airports.
It won’t be a big surprise if, having already announced interest in privatizing the likes of Toronto Pearson International Airport, Carney lays out next steps for that process. There’s certainly demand for that, as evidenced by a report last week in The Logic about interest from Australian asset managers.
But a chance to buy our airports is one thing for which our own pension funds have long been clamouring, because of reliable revenues. That seemed to be part of the reason Carney opened the door to privatization in the first place.
So if that kind of buying opportunity is a big part of the pitch to the overseas crowd, it could be a sign of being an overly motivated seller.
Carney is under growing pressure to show results from his push to prove that Canada is open for business. His government was rattled by a recent Financial Times report the United Arab Emirates approached the new Major Projects Office looking for investable opportunities and was turned away.
But Carney shouldn’t just be chasing deals for the sake of deals, just to avoid more stories like that coming out of his flagship event.
