Canadian PPP market a case of peaks and valleys

Inframation released its Canada P3 state of the market report and has discovered the value of deals to reach financial close in 2017 to date is $2.09 billion (all figures CAD), the lowest since the $1.42 billion recorded in 2006. The nine deals to reach financial close in 2017 have been in social (four), environment (three) and transport (two) sectors. Of the nine, seven were in Ontario and the two in British Columbia. The small capex size of the nine deals has meant that loans are set to be at their lowest level since 2012 and capital markets since 2006. 

The small capex for build-finance or design-build-finance deals as well as their increasing prevalence in the market suggests that equity deployment for 2017 is likely to come in at a sub-$50 million value for the first time since 2006. However, major procurements such as the Finch LRT, Hurontario LRT, Hamilton LRT, Ottawa Stage 2 LRT, the Gordie Howe Bridge, Toronto Courthouse and Union Station Enhancement could see the 2018 capex figures top the $10 billion mark once again. P3

Throughout the latter half of 2017, provinces began making announcements regarding infrastructure spending, and the news sounds promising. For example Québec reaffirmed its commitment to infrastructure investments, especially after significant improvement in the province’s economic performance. Capital investments will remain steady at $91.1 billion over the 2018-2028 Québec Infrastructure Plan, with $9.6 billion planned in 2017-2018. Priority will be given to public safety and the replacement of outdated infrastructure and economic development, with projected capital investments of $13.7 billion in 2018-2019 under the Québec Infrastructure Plan. 

Manitoba’s Speech from the Throne in November included references to strategic infrastructure investments, public-private partnerships (P3s) and a new social impact bond program. The speech referenced the government’s ongoing commitment to “making strategic infrastructure investments on the basis of real value for money,” as well as maximizing the use of federal funding under the Investing in Canada Fund and the Building Canada Fund. The government will also develop a long-term capital plan to get more value from renewing and building strategic infrastructure. P3

In May, Premier Brian Pallister announced that the Manitoba government would study options to use P3s to deliver $100 million in school projects, and the Speech from the Throne reaffirmed the intention, saying the government will refine the framework for P3s to “deliver public infrastructure, including new schools, on time and on budget.” Winnipeg has procured several transportation projects using the P3 model and St. Paul’s College is currently evaluating proposals for a student housing P3 project.  

Ontario’s 2017 Fall Economic Outlook and Fiscal Review projects improved economic growth in the next three years and highlighted several key infrastructure investment areas, most of them  in public transit, transportation and other priority infrastructure projects, such as the GO Regional Express Rail and Hurontario Light Rail Transit.

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Source: InframationAn Acuris Company 

Ontario

Pipeline value:
$21.85 billion.
Live deals: 31
Notable deals:
RER Package 3
($9.00 billion)
Confederation Line
($2.49 billion)
Gordie Howe Bridge
($2.00 billion)
Hurontario LRT
($2.00 billion)
Finch West LRT
($1.00 billion)
Hamilton LRT
($0.89 billion)
Union Station Enhancement
($750 million)

British Columbia 

Pipeline value:
$ 3.33 billion
Live deals: 6
Notable deals:
Roberts Bank Terminal 2 ($2.51 billion)
Royal Inland Hospital ($0.41 billion)
Abbotsford Courthouse ($0.15 billion)

Northwest Territories

Pipeline value:
0.21 billion
Live deals: 1
Notable deals:
All Season Road
($175 million)

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