Shares of Mexico's IDEAL skyrocket after Canada pension plan deal

A concessionaire owned by Mexican mogul Carlos Slim is joining forces with two Canadian pension plans to invest in infrastructure projects.

Mexican holding company IDEAL, the highway operator unit of Slim conglomerate Grupo Carso, signed a binding agreement with the Canada Pension Plan Investment Board (CPPIB) and the Ontario Teachers’ Pension Plan to sell stakes in four highway concessions. 

The Canadian funds will also buy a minority share of the infrastructure firm.

IDEAL's shares on Mexico’s stock exchange (BMV) jumped almost 50% on Friday after the announcement to their highest since 2017. 

What’s the deal?

The stakes in the four highways will be offered via an infrastructure and energy investment trust known in Mexico as Fibra E, which will be listed on the BMV.

The Fibra Es were introduced four years ago to promote private sector investment in energy and infrastructure projects.

If everything goes according to plan, the Canadian funds will initially acquire 18.7% of the four toll roads before they are offered to other investors via the Fibra E.

The highways are Arco Norte in Mexico City, Chapala-La Venta in Jalisco state, Libramiento Toluca in Mexico state and the Tijuana-Mexicali route in Baja California Norte state.

According to IDEAL, revenues from the four highways totaled 5.6bn pesos (US$290mn) last year, with Arco Norte bringing in the most at 3.6bn pesos. 

However, CPPIB and Ontario Teachers’ must first launch a public tender offer on the BMV to acquire 40% of IDEAL's shares at 43.96 pesos each.

CPPIB and Ontario Teachers will then own 23.7% and 16.3%, respectively, of the Mexican firm. 

CPPIB said in a press release it intends to use part of what is brought in from the concessions for other infrastructure projects.

“This investment in IDEAL provides CPPIB with the valued opportunity to access a diversified portfolio of assets with stable cash flows, while also providing the opportunity for future growth through development opportunities in Mexico’s infrastructure sector,” Scott Lawrence, managing director and head of infrastructure at CPPIB, said in a statement. “Broadening our partnership with Ontario Teachers’ and IDEAL further strengthens our commitment to long-term ownership.”

IDEAL’s portfolio includes 18 infrastructure concessions in Mexico – 13 toll roads, three logistics terminals and two wastewater treatment plants, as well as an electronic toll collection service business and an operations business. 

The three entities are already partners in the Arco Norte and Pacífico Sur toll roads.

And last year, CPPIB and Ontario Teachers’ agreed to purchase a minority share of IDEAL's Concesionaria Autopista Guadalajara-Tepic (CAGT).

Pictured: A toll road in Tepic, Nayarit