FROM SOUP TO NUTS

CFI chose to reduce energy consumption by creating many sources of natural light, such as windows and skylights throughout our building. Layered and independently switched lighting, and timers throughout our building control over how many lights are on at any one time.

by BARRY CRITCHLEY
The Financial Post
Monday, November 15, 2004

From soup to nuts That could be the new marketing slogan for CFI Group, which has closed its first equity fund, an $80-million infrastructure fund whose limited partners include Ontario Teachers’ Pension Plan, Teachers’ Retirement Allowances Fund (Manitoba), Kilmer Van Nostrand and The Canadian Medical Protective Association.

The fund—which has a nominal 10-year term and which is seeking returns in the 15%-to-20% range—was created to take advantage of the increased demand for financing small and mid-sized infrastructure projects which are typically associated with the public sector.

As well, CFI determined there was a need given that “a growing number of public sector-private sector-partnerships (the so-called P-3 sector) were being under-funded,” said Kevin Andrews, CFI’s chief executive.

“We have been in the business for 20 years but have never had our own equity capital. [In the past] we would do the debt side but the owners would have to find the equity. Now we can invest the equity,” said Andrews.

The fund will invest in projects requiring from $2-million to $16-million in equity capital, which means that it will seek out projects not deemed to be elephants.

However, because of co-investment rights, the CFI Group will be able to commit even more capital. Andrews said the fund will typically invest in the construction of power generation plants and water and waste treatment plants.

“They will be brand new projects [typically] with some quasi-government attachment to them such as a lease-payment or a power purchase agreement.” said Andrews.

The fund will also consider infrastructure projects that have a broad customer base—such as a water project where the fund can garner a claim on the payment of water bills.

Andrews said that the fund won’t have to sell an investment to realize the return.

“These are cash flow assets. It is an IRR [internal rate of return] driven fund, so our analysis and investment decision will be based on the cash flow from the projects over the next 10-20 years.”