Canadian Lawyer

"There are a number of entities with a lot of capital looking to deploy it smartly, and governments around the world have some very highly desirable assets that those financial institutions or pension funds with capital are looking at." PATRICE WALCH-WATSON, TORYS LLP toll road and a 50-per-cent stake in the San Cristóbal Tunnel. Brookfield is focused primarily on property, power, and infrastructure assets. At the time there was concern the investment might be in an earthquake zone, but Brown says moving into riskier areas can be part of the play. "You understand why these funds are moving up the food chain in terms of risk when you realize they need to meet the returns needed to fund the pension fund contributors when they retire." Some Canadian pension funds are looking for opportunities outside of Canada to own infrastructure assets as opposed to the P3 model where you have a lender. "They are looking to sim- ply have a revenue stream at a rate of return that meets their portfolio needs," says Osler Hoskin & Harcourt LLP partner Rocco Sebastiano. Whether it's energy projects, toll roads, or park- ing lots, investment funds are simply drawn to the stable cash flow public infrastructure projects deliver. There is some operational risk but very little compared to other market ventures these days. The problem is they are few in number compared to the other pro- spective deals out there. With all the talk of tough times at the municipal level, the sense is there may be more movement at that level in the years to come than in the past. "One of the challenges we have in getting municipal projects to be attractive is deal size and project size and the promise of deal flow," says Sebastiano. "These things are resource intensive — they want to know there is going to be regular deal flow." In June of last year, Osler acted for Atomic Energy of Canada Ltd. on the sale of its Candu Energy division by Natural Resources Canada. The Crown corporation's reactor business was sold to SNC-Lavalin Group of Montreal for $15 million, ending a process that began in 2009. The government has the opportunity to get royalties down the road because it retained the intel- lectual property rights. The government will also provide SNC up to $75 mil- lion to complete a new reactor. "What would have probably taken a private- sector entity much less time in terms of getting that deal done it took a lot longer," says Sebastiano. "I expected a further announcement of other things but that deal closed three months ago and there doesn't seem to be activity on other assets." Getting government to make deci- sions on a timeline the private sec- tor would normally demand can be a challenge on M&A deals of that kind. "They've got so many levels of approvals they need to obtain it makes those deals much more time consuming and you need a lot of patience," says Sebastiano. It also helps if there is someone to cham- pion the transaction. "In the Candu sale the deputy minister was very much behind it and he believed it was some- thing the government should do. When you lack someone like that to run with it like he did, it does make it difficult to get those M&A deals done," he adds. Projects like the Candu sale also need a champion who is well regarded — whether it's a senior bureaucrat or depu- ty minister, it's important to have some- one who has the ear of the government or cabinet who can help facilitate the discussions and make sure things stay on the front burner and move forward. The flipside of that is P3 school projects in B.C., Ontario, and Alberta. "I don't think you'd come upon a more streamlined and efficient process anywhere in the world," says Tobor Emakpor, a partner in Osler's construc- tion and infrastructure group. "They have been fantastic in getting a large number of projects done in an incred- ibly short period of time." In the U.K., the last school deal he closed took just under two years from the initial selec- tion of the proponent. Canadian assets are in fact in high demand from investors outside our bor- ders. "We were working with a group out of New York looking to do an acqui- sition of a Crown corporation and that's where there is revenue to be derived," WeirFoulds' Brown says. "There are a number of entities with a lot of capital looking to deploy it smartly, and governments around the world have some very highly desirable assets that those financial institutions FEEDS LEGAL LegalFeeds_CL_Feb_12.indd 1 A daily blog of Canadian Legal News Powered by & www.CANADIAN Lawyermag.com M A RCH 2012 43 12-01-19 2:40 PM canadianlaw Canadian Law yermag.com/legalfeeds yer Law Times

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