The boutique investment bank hired by Ottawa to manage the purchase and sale of the Trans Mountain pipeline recently reached out to large institutional investors that could potentially be interested in the project, said Canada Pension Plan Investment Board CEO Mark Machin.
Mr. Machin, who independently manages the $356.1-billion CPP Fund on behalf of Canadian contributors, told MPs Monday that the CPPIB has an obligation to explore potential investments. He said, however, that no decisions have been made as to whether it would be interested in buying the controversial pipeline.
“We’re still evaluating the situation,” Mr. Machin said when asked by Conservative MP Tom Kmiec whether the board would consider investing in the Trans Mountain pipeline.
“We obviously have an obligation to assess every major investment opportunity that comes along and fully understand the risks, fully understand the potential returns and understand how it might fit into our portfolio.”
The federal government announced late last month that it will buy the existing Trans Mountain pipeline from Kinder Morgan at a cost of $4.5-billion. Until it can attract a buyer or buyers, it will also pay for a major expansion of the pipeline along the route from Alberta’s oil sands to Burnaby, B.C., a project that has been estimated to cost $7.4-billion.
Finance Minister Bill Morneau has said the government’s goal is to remove the political uncertainty hanging over the project and to sell the pipeline once completed. Mr. Morneau has said pension funds and Indigenous groups could be potential future owners of the pipeline.
When asked directly, Mr. Machin said Monday there have been no conversations between federal government officials and CPPIB executives related to the Trans Mountain pipeline.
“What I can say is that Greenhill – which is the financial adviser to the federal government – has approached us,” he said. “I believe they’ve approached a lot of funds domestically and internationally. But we have not taken on any confidential information and we’ve not gotten into any detailed discussion.”
Greenhill & Co. is a New York-based boutique investment bank that has been hired as the sole adviser to the federal government on its Trans Mountain acquisition, as well as its future sale.
A spokesperson for Greenhill declined comment Monday.
A CPPIB official said the outreach from Greenhill was in the form of an e-mail to Mr. Machin that was received on June 7. The e-mail was also sent to other institutional investors.
During his House finance committee appearance, Mr. Machin said the CPPIB has had both positive and negative experiences with pipeline investments.
Several Indigenous leaders have expressed interest in taking an equity stake in the pipeline, including members of the Athabasca Tribal Council that represents First Nations and Métis communities around Fort McMurray, Alta.
The CPPIB is facing increasing calls from environmental groups to reduce its investment in carbon-intensive assets such as an oil-sands pipeline, and has committed to providing better disclosure of the risks and opportunities that climate change poses to its portfolio.
With files from Shawn McCarthy.
Bill Curry