U.S. private-equity giant KKR sees opportunity in Canada’s infrastructure push. The firm, which manages US$723 billion in assets, is shifting its business focus towards managing assets that produce regular cash flows, a move that is being mirrored by many of the world’s largest investors. KKR’s interest in Canada comes amidst a global surge in the construction of new digital and energy infrastructure projects, a trend that has turned this once-staid sector into a hotbed of investment activity.
Canada’s Infrastructure Appeal
Canada’s wealth of energy resources, stable legal environment, proximity to the U.S., and access to Asian and European markets have all contributed to its appeal as an investment destination for KKR. Furthermore, Canada’s push to construct major infrastructure projects, spearheaded by the federal government in Ottawa, has also caught the firm’s attention.
“In the key sectors that are driving the biggest growth, be it energy or digital infrastructure, both Canada and the U.S. should play a really big role going forward,” stated Brandon Freiman, KKR’s head of North American Infrastructure. He emphasised that these two major trends are having a significant impact on the economy and are very relevant to infrastructure investments.
KKR’s Infrastructure Investments
KKR’s infrastructure assets have grown from about US$5 billion to US$90 billion in the last decade. The firm has already made a series of deals in Canada, particularly in the energy sector. KKR’s first infrastructure deal worth over $1 billion was with Calgary-based Veresen Inc., an energy infrastructure company that later merged with Pembina Pipeline Corp. KKR currently owns 40% of Pembina Gas Infrastructure and has a $1.2 billion stake in the Labrador Island Link, a 1,100-kilometre transmission line that carries renewable energy to Newfoundland and Nova Scotia.
Challenges and Opportunities
Current global trade disruptions, such as tariffs and political tensions, could pose challenges for Canada, given its reliance on the U.S. economy. However, KKR believes that the importance of infrastructure investment is such that key projects will not be derailed. “If you look at things like data-centre demand, LNG demand, fibre needs, utility infrastructure, that growth will continue unabated whether the recent tariff action on Canada is rescinded or amplified,” Freiman said.
International Interest in Canadian Projects
KKR is not the only major investor showing increased interest in Canadian projects and assets. Swedish fund EQT AB, which manages €267 billion ($432 billion), is considering expanding its presence in Canada. Additionally, Australian fund manager IFM Investors recently opened an office in Toronto with plans to add to its $2.1 billion Canadian portfolio.
Canada’s Potential in Digital Infrastructure
Canada has the potential to participate in the booming data-centre industry, which is fuelling rapid advances in artificial intelligence. The demand for data-centre capacity is growing steadily. “The level of demand is extraordinary,” said Freiman. “We get a lot of questions around, is it overhyped? But with the benefit of time, the demand trends are only going in one direction.”
