Canada's $35B Infrastructure Bank picks Pierre Lavallee as CEO

The C$35 billion (US$27 billion) Canada Infrastructure Bank has found its chief executive officer, with Pierre Lavallee soon taking the helm of an agency Prime Minister Justin Trudeau hopes will spur widespread spending on things like transit and trade links.

Lavallee will be announced Thursday as the new president and CEO of the Toronto-based bank and is scheduled to start on June 18. He was formerly senior managing director and global head of investment partnerships for the Canada Pension Plan Investment Board, where he spent six years.

The arm’s-length, government-financed lender will have “a lot of flexibility as to where in the balance sheet we can position ourselves” to spur relatively large-scale revenue-generating projects, Lavallee said in an interview Wednesday. He said the bank could build on the global reputation of Canada’s pension funds, that projects will be assessed case-by-case and that the bank can be “creative” in how it structures a deal.

“There is a real demand for infrastructure assets that I think the bank can help attract into Canada, and this is both from Canadian institutional investors and foreign institutional investors,” Lavallee said. “It’s really not everyday someone offers you the ability to lead the startup and build-out of an institution like that.”

The bank is mandated to invest in revenue-generating projects in three categories: public transit, green infrastructure and trade-and-transportation. Finance Minister Bill Morneau has said the bank’s goal is to leverage its funding -- drawing five or six dollars of private money for every one of its own.

'OPEN MIND'

The infrastructure bank was a key platform commitment by Trudeau’s Liberals in the 2015 election, but was launched only last year. It hasn’t yet invested in a project, though the enacting law has been passed and the board selected.

Setting up a major agency takes time, Lavallee said, “and I personally don’t feel like it’s actually been a long time, but that’s one man’s view.” Morneau has said C$15 billion of the bank’s capital will be concessional capital, or direct funding to push projects to approval, while the remaining C$20 billion will be for loans or equity stakes.

Lavallee’s appointment comes with one Canadian infrastructure project in the spotlight: Kinder Morgan Canada’s Trans Mountain oil pipeline expansion. The federal government is in talks with the company to somehow backstop the project after the company threatened to walk away in the face of provincial opposition.

Lavallee demurred when asked if the bank could invest in Trans Mountain or other pipelines, declining to comment on a specific project but citing the mandate to invest in revenue-generating projects from the three categories. “We’re keeping a very open mind, so I expect that there will be lots of opportunities that will come our way over time,” he said.

‘TRANSFORMATIONAL' PROJECTS 

Infrastructure projects are notable for how long they take, and typically take more time than a buyout. “I wish I could tell you this is a few week’s cycle-time, but the reality is, it’s going to be several months and the timing is going to be very project-specific,” he said, adding the focus will be on a smaller number of big projects, rather than a large number of smaller-scale ones. “We are going to focus on relatively large transformational-type projects.”

Lavallee will lead strategy and day-to-day operations of the bank while reporting to the board. At CPPIB, Lavallee led a team managing about C$94 billion in assets, the bank said in a statement. He was previously executive vice-president at Montreal-based Reitmans Canada Ltd. and a partner with Bain & Co.

“With an exceptional combination of investment and public-sector expertise, Pierre is well placed to set the strategic course and direction of Canada Infrastructure Bank and develop a high-performing management team,” Janice Fukakusa, the bank’s chair said. Annie Ropar, incoming chief financial officer and chief administrative officer, begins June 1.