Our infrastructure and timberland investments are designed to generate stable, long-term returns.
These two asset classes had a combined value of $9.3 billion at December 31, 2010.
Our global portfolios are focused on infrastructure and timberland assets that have a long economic life and offer low-risk, reliable returns linked to inflation in order to help pay pensions for decades.
We began investing in infrastructure assets in 2001. Generally, we are a direct investor. We are capable of financing large investments with a focus on private equity ownership. We often invest with financial partners that have significant infrastructure experience.
We look for businesses and opportunities in regulated industries that will provide stable returns with low risk. We find good investment opportunities in jurisdictions that have a fair and transparent regulatory framework, creating a strong environment for private investment. We invest in utilities, toll roads, airports and port facilities.
Timberland assets correspond to the pension plan’s lengthy investment horizon. In our timberland portfolio, we acquire timber-producing properties, leasehold interests and timber-cutting rights around the world. We invest solely in managed plantations.
Significant investments
Power Generation and Distribution
We jointly acquired Chilean electricity transmission and distribution company SAESA Group with Morgan Stanley Infrastructure in 2008. SAESA is the main provider of electricity in the rapidly growing southern regions of the country and also owns and operates 148 megawatts of wind, hydro and thermal power generation capacity. In 2005, we bought a 50% interest in InterGen N.V., which owns 12 state-of-the-art power plants around the world. This investment complements our 50% stake in Northern Star Generation, which holds interests in 11 power plants in the United States.
Water and Wastewater Utilities
Attracted by the company’s regulated utility activities, we bought a 25% stake in Northumbrian Water Group in 2005 and we owned 27% at the end of 2010. Northumbrian provides the regulated supply of water and wastewater services to 4.4 million people in England. In 2007, we expanded our portfolio by acquiring significant or controlling interests in three water utilities in Chile representing approximately one-third of Chile’s regulated water and wastewater market: Empresa de Servicios Sanitarios del Bio-Bio S.A. (ESSBIO), Nuevosur S.A. (formerly Aguas Nuevo Sur Maule, S.A.), and Esval S.A.
Gas Distribution
We were part of a consortium that purchased Scotia Gas Networks in 2005 and hold a 25% stake in the enterprise. It operates regional gas distribution networks in Scotland and southern England that deliver gas to 5.7 million customers.
Airports
We began investing in airports in 2002. At the end of 2010, we owned an 11% interest in Sydney Airport, Australia’s major airport gateway and the country’s largest domestic airport with more than 30 million passengers annually. We also own, with a partner, a 48.25% stake in Birmingham International Airport, the sixth largest airport in the U.K. serving more than nine million passengers annually. Our direct stake in Bristol International Airport, a top regional U.K. airport, was approximately 49% at the end of 2010.
Port Facilities
In 2007, we acquired four North American marine container terminals: Vanterm and Deltaport in the Vancouver, British Columbia, area; New York Container Terminal on Staten Island, New York and Global Terminal in New Jersey. Now operating as GCT Global Container Terminals, the company handles more than two million containers annually.
Rail
In 2010, we acquired High Speed 1 (HS1), a 109-km high-speed rail line linking London with the Channel Tunnel, with our 50% partner Borealis Infrastructure Management. HS1 runs domestic commuter services and international services connecting London and continental Europe. We were attracted to HS1 because of its well-established ridership and regulated track access charges.