Cando Rail & Terminals Acquisition Expands AIMCo Exposure to Canada Rail Infrastructure

By Mario Marroquin

The Alberta Investment Management Corporation has announced plans to acquire a 100% equity stake in Alberta-based rail owner Cando Rail & Terminals

Cando Rail & Terminals, which owns a network of 40 industrial switching facilities, nine owned terminals a short line, and over 100 locomotives in Canada, was sold from private equity firm ThorQuest Partners.

And although no price was disclosed by the fund, Bloomberg reported Cando Rail was for sale for $800 million in November.

"Cando is the type of platform investment that has become the hallmark of AIMCo's infrastructure portfolio,” Ben Hawkins, head of infrastructure, renewables and sustainable investing at AIMCo, said in a prepared statement. “With this investment, our clients add one of Canada's most successful rail platforms to their infrastructure portfolios.”

Cando Rails operates the Central Manitoba Railway in Winnipeg and owns switching operations in Wisconsin, Michigan and Arkansas.

The $168 billion AUM state-owned fund reported a 19% annualized net return in infrastructure in March, surpassing its benchmark of 6.8%. Infrastructure accounted for approximately 7.5% of the fund’s allocation.

AIMCo said Canadian infrastructure accounted for 4.6% of the fund’s total investments in infrastructure – excluding renewables – while the U.S. (41.7%) and Europe and U.K. (27.4%) account for the majority of the fund’s infrastructure investments.

“Concerns of rising inflation, rising rates with possible slower growth are key issues for almost any investor looking ahead,” AIMCo said in its annual report. “Given this macro backdrop. we expect the demand for inflation-sensitive assets such as infrastructure and renewable resources to remain robust through 2022 and beyond.”

ThorQuest first invested in Cando Rails in 2018. 

AIMCo reported a net return of 14.7% at the end of March and is also a long-term investor in the Porterbrook Group, which leases about a quarter of all rolling stock to rail networks in the U.K.