The US$157 billion British Columbia Investment Management Corporation (BCI) has chosen London as its first base of operations outside North America in a bid to ramp up its infrastructure acquisitions in the UK and the EU.
BCI’s real estate subsidiary QuadReal opened an office in London in 2016; it also has international offices in Hong Kong, New York and Los Angeles. Last year, BCI opened its office in New York to build a private equity team, in addition to its QuadReal office. The establishment of BCI offices in cities where QuadReal already has operations suggests that it may open an Asian office in Hong Kong in the future. BCI’s portfolio has gone from less than 20% invested outside of Canada in 2000, to more than 60% in 2022, which it says improves returns, choice, and risk management.
The new London office will host an infrastructure and renewable resources (I&RR) team, headed by Lea Dubourg-Hrachovec. She joins from the Pension Protection Fund where she is head of infrastructure, timberland and farmland.
BCI’s I&RR program is valued at approximately C$20.2 billion (US$15 billion), and invests in tangible long-life assets in the Americas, UK, Europe, and Asia Pacific, including a portfolio of direct investments in regulated utilities, energy, telecommunications, transportation, timberlands, and agri-businesses.
Last year, BCI completed its biggest investment outside North America, joining Macquarie Asset Management in a consortium that acquired a 60% equity interest in National Grid Plc’s UK gas transmission and metering business (NGG), on the basis of a GBP9.6 billion (US$12.6 billion) enterprise value. National Grid also entered into an option agreement with the Consortium for the potential sale of the remaining 40% of equity in the first half of 2023. If the option is exercised in the next few months, the consideration would be paid in cash to National Grid on broadly similar terms to the transaction. Other European major acquisitions have also been conducted via partnerships and fund and, in relation to real estate, through QuadReal.
An office would enable BCI to originate its own deals – and our data demonstrates that the presence of an office massively increases investment in a country. Last year, Canadian public pension funds AIMCo, BCI, CPP, OMERS and OTPP along with Abu Dhabi sovereign wealth fund Mubadala invested US$7 billion in opportunities in renewables, telecommunications, electricity transmission and gas pipelines.
With BCI’s decision to create its base in the British capital, London retains its position as the most favored city among state-owned investors, with a community of more than 1,000 SOI personnel working in 25 branch offices. Not only does London eclipse Paris, it is also preferred over New York City (22 offices), Hong Kong (nine offices) and San Francisco (nine offices). Four SOIs use the city as the location of their European hub of operations, each with over 100 personnel: CPP (156), GIC (140), OMERS (115) and NBIM (107).
The UK’s environment is more attractive in terms of acquisition of infrastructure and real estate than other European markets. For example, while in France the electricity infrastructure is dominated by EDF, majority owned by the government, in the UK there are a range of operators throughout the generation, transmission and retail sectors in a market that is fully privatized.