By Lauren Bailey
As chief investment officer of the Building Ontario Fund (BOF), Anca Drexler and her team are tasked with catalyzing infrastructure investments that earn yields, while optimizing social impact.
Established by Ontario’s provincial government, the fund’s mandate is clear: Fuel high-impact, revenue-generating projects that might otherwise stall due to financing hurdles, while delivering long-term value for citizens.
Sebastien Betermier, associate professor at McGill University’s Desautels Faculty of Management, recently wrote a report for the C.D. Howe institute on the “investment catch-22” private market developers face in getting infrastructure projects off the ground. It noted private investors view new infrastructure markets as complex, unfamiliar, and high risk and that “the infrastructure bank model can create value as a cost-efficient policy tool in the government ecosystem.”
That report underscores that neither private nor public capital alone can meet the scale of infrastructure demand, said Drexler, in an interview with Markets Group. “[Betermier’s] research shows that well-structured public investment vehicles such as the BOF can reduce risk in projects and attract and unlock institutional capital, and in doing so, accelerate delivery.”
She is seeing this thesis validated in the BOF’s work, as its model is designed to align public benefits with investor confidence. “We do that through rigorous project selection, by sharing risk and through long-term partnerships.”
A coordinated mission
To address Ontario’s most pressing infrastructure challenges, the BOF deploys up to C$8B from its core investment fund — which focuses on five priority areas — and administers the C$3B Indigenous Opportunities Financing Program.
The BOF’s core investment fund unlocks infrastructure capital for projects that aligns with institutional investors’ priorities and meets the needs of Ontario residents. Its investment strategy taps into sectors that can unleash public benefits in areas where gaps are greatest, including affordable housing and student housing, long-term care homes, energy infrastructure, transportation systems, and municipal and community infrastructure.
Ontario recently expanded the BOF’s purview to include the Indigenous Opportunities Financing Program, a pre-existing initiative that provides loan guarantees to support Indigenous-led infrastructure projects that emphasize community ownership, participation, and long-term economic benefits.
Whether it’s a $150M long-term care facility, a regional energy project, or a housing development in partnership with Indigenous partners, the BOF seeks to structure deals that bring investment partners to the table. “We’re not in this to do it alone. Our job is to make sure the math works, the risk is manageable, and the project delivers for Ontario.”
She stressed that the organization isn’t there to crowd out private capital. “We only invest when we fill in the missing piece. Think of us as that part of the puzzle that is necessary to de-risk projects. We co-invest along with private capital, and we will invest up to 50% participation. . . . “We’re here to make sure that good projects don’t sit on a shelf. We’re here to make them real.”
The fund has the flexibility to take positions across the capital stack, from providing loans to mezzanine financing to equity investments, said the CIO. “We do that for large-scale, high-impact investments where our capital invested is at least $100M (or $50 million in projects that advance Indigenous well-being). When we invest alongside private capital, we do so only in revenue-generating projects.”
While BOF seeks to deliver a return that is above its cost of capital and operations, Drexler pointed out that it will also factor in a discount to market returns to account for the social and economic benefits delivered by the projects.
“This is about transformational impact. We aim to bring private capital to the table in a way that moves projects forward faster, smarter, and with greater long-term value. Our returns are measured in both dollars and lives improved.”
Where profit meets purpose
When Drexler joined the BOF earlier this year, its dual purpose of generating financial returns, while creating tangible public and social value was what drew her to the CIO role.
Her two decades of experience in the institutional world, including at leading Canadian pension funds OPTrust and the Ontario Municipal Employees’ Retirement System, has enabled her to simultaneously navigate risk management and social impact when setting portfolio strategy.
Pension plans have multiple stakeholders, from their plan sponsors and members to their boards to internal and external partners, said Drexler, noting the BOF is no different. As the infrastructure fund has a multitude of stakeholders and partners, building long-term, trusted relationships with external partners is pivotal to her role.
“Each of these stakeholders bring different perspectives to a project. In all of my roles, I’ve had a strategic top-of-the house view of thinking about the whole portfolio and how to allocate capital in a way that optimizes . . . the levers we had.”
She pointed out the importance of taking a holistic view when it comes to portfolio strategy, balancing short-term financing needs with long-term strategic objectives. “Every capital decision is about trade-offs between risk, return, and public value. My role is to make sure we understand those dynamics clearly and allocate in a way that serves the bigger mission.”
The BOF’s pipeline includes student housing projects, an area in which Drexler has seen increased demand. The organization also recently closed its first two long-term care housing projects — one located in downtown Toronto and the other in rural Ontario.
