Of course, that didn't happen overnight. Paul Boucher, senior investment director at fund manager Meridian Infrastructure, has spent much of the last decade bidding on some of Canada's highest-profile PPPs, like British Columbia's Sea-to-Sky Highway and Ontario's Durham Consolidated Courthouse. He remembers a much different industry back in the early 2000s.
"Initially, the market in Canada was, on the equity side, supported mainly by the large, international fund managers that had a PPP slant to them," he says. Names like Macquarie, ABN Amro and Babcock & Brown "were the main players you would see more often than not in the Canadian marketplace," he adds, pointing out that he worked at two of them - ABN Amro and Babcock & Brown - before settling into his current position at Meridian near the end of 2008.
The credit crisis disrupted this order as well as re-priced risk capital. ABN Amro exited the market and was sold to RBS, Santander and Fortis (Forits) and Babcock & Brown went into administration, opening up opportunities for others to enter the market.
"What we're seeing now are players who have replaced the guys who were in the top three spots such as, Meridian and large industrials that fund the projects themselves," Boucher says. These large industrials include Hochtief, Bouygues, Bilfinger, Acciona, ACS, Cintra, Carillion and, most recently, Balfour Beatty.
"So there's a lot more international industrial players in the Canadian market, due to their slower domestic activity, than just the pure financials that existed just five years ago," he says.
For firms like Meridian - a financial player focused on the PPP market for new-construction PPP projects - this is both a blessing and a challenge. "There's more people to partner with. There's also more competition," Boucher says.
But the growth hasn't all been on the side of industrial developers. Indeed, one of Meridiam's newest partners is a Canada-focused fund manager - Fiera Axium Infrastructure - with whom the firm closed on the $470 million Montreal University Hospital Research Centre project in May. Fiera Axium believes the Canadian PPP market is deep enough and attractive enough that it can be used to anchor a base of institutional investors around a fund that dedicates its capital to Canada and in particular PPPs. The firm is targeting $400 million in total commitments to the fund.
"We believe the Canadian market is the most sophisticated toward infrastructure," says Bruno Candes, vice president and senior investment director at Fiera Axium in Toronto. And it's no longer just the big guns of the Canadian institutional world, like the $129.7 billion Canada Pension Plan Investment Board. Increasingly, he's noticing appetite for infrastructure among the country's smaller pension plans - those with under $5 billion in investable assets - both for PPP equity and debt.
For example, on the aforementioned Montreal University Hospital Research Centre project, Fiera Axium and Meridiam sold $400 million of A-rated bonds to a mix of pension funds as well as the more traditional life insurance plans: a sign that the institutional market has been sufficiently "educated" about the asset class to demand significant PPP exposure, Candes says.