The pension fund for Quebec workers has set up a new unit to review the fund's potential ownership of two rapid transit projects in the Montreal area.

The Caisse de dépôt et placement du Québec said Thursday it has set up CDPQ Infra, a new operating subsidiary that will evaluate the commercial potential of two transit projects – a public transit line on the new Champlain Bridge and a line linking downtown Montreal to the Montréal-Trudeau International Airport and the West Island.

The Caisse and Quebec government announced a deal early this year under which the pension fund would look at financing and owning transit systems the cash-strapped province could no longer afford to pay for to build on its own. The deal signalled a new method of financing infrastructure at a time when governments are short on cash and there's a resistance to tax hikes.

In Ontario, the ruling Liberals have promised a $130-billion, 10-year program to build new transit systems, highways and other infrastructure to help modernize the transportation backbone of the economy. To finance the effort, the government is using money from asset sales, the privatization of the Hydro One utility, green bond financing and other revenues.

The Liberals have also used public-private partnerships for more than a decade to help finance everything from new highways to hospitals and rapid transit – including the biggest transit project in the province's history, the Eglinton Crosstown Line in mid-town Toronto.

However, the government has also proposed to ease rules that limit big Ontario-based pension funds such as OMERS, Teacher's Pension Plan and the CPP Investment Board from owning more than 30 per cent of a public infrastructure project.

In the 2013 Ontario Economic Outlook and Fiscal Review, the province announced it would propose regulations to allow pension plans to further invest in local infrastructure by exempting them from the 30-per-cent ownership rule.

In Quebec, the new Infra subsidiary will have a five-member board chaired by Michael Sabia, president and CEO of the pension fund, and will also include two international experts as external directors who will be appointed in the next few months.

Macky Tall, senior vice-president of infrastructure, will be president and managing director of CDPQ Infra.

Caisse de dépôt et placement du Québec had $225.9 billion in net assets at the end of 2014 and is one of Canada's biggest institutional fund managers. It invests in financial markets, private equity, infrastructure and real estate around the world.

Caisse de dépôt sets up new transit investment unit in Quebec

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