Cordiant Capital Plans to Raise $750 Million Debt Fund

Bloomberg
December 15, 2009

Dec. 15 (Bloomberg) — Cordiant Capital Inc., a Montreal- based debt and private-equity manager, plans to raise $750 million in the next year from investors such as pension funds for an infrastructure loan fund targeting emerging markets, Chief Executive Officer David Creighton said.

Cordiant said Dec. 1 it had been hired by the International Finance Corp., the private investment arm of the World Bank, to manage a separate $1 billion loan fund known as the Infrastructure Crisis Facility Debt Pool. Through its proposed fund, Cordiant would let investors back projects such as power plants and bridges.

“With the ICF Debt Pool, we have this front-row seat on all this deal flow, so why not pick some of the deals we think we will offer good opportunity and put them into a separate fund that would be financed by the private sector?” Creighton said in an interview in Montreal late yesterday.

More than $21 trillion will be needed to finance infrastructure projects in emerging markets during the next decade, according to International Finance Corp. estimates. Heightening the need for capital is the progressive exit from infrastructure loans in the last decade by U.S. and European banks, Creighton said.

Cordiant manages about $2 billion in emerging-market loans and private equity. The firm has invested in about 160 projects worldwide since its inception in 1999 and has average annual returns of about 7 percent, said the 51-year-old Creighton, a former vice president with Bank of Montreal’s BMO Nesbitt Burns brokerage arm. Cordiant’s chairman is Claude Lamoureux, former CEO of the Ontario Teachers’ Pension Plan.

10 Percent Returns

Cordiant selects investments among projects financed by lenders such as the African Development Bank and the London- based European Bank for Reconstruction and Development.

The proposed loan fund would invest in subordinate and mezzanine debt while targeting average annual returns of about 10 percent, the executive said.

Creighton declined to identify investors that he has approached about the new fund. Current Cordiant investors include Ontario Teachers’, Canada’s third-largest pension fund manager, and PGGM, which manages the assets of the Netherlands’ second-biggest pension fund.

“Our investors are looking for long-term, inflation-linked assets that generate cash,” Creighton said. “This is not a quick flip. They want something that matches their liabilities.”

Since being hired to manage the ICF Debt Pool, Cordiant has made one investment — a $30 million loan to help finance the construction of a container port terminal in Vietnam.

Studying Investments

Investors in the ICF Debt Pool include the German government and Proparco, France’s development-finance agency. The fund has total commitments of $4 billion.

Cordiant’s 20-person team is studying about 20 potential investments, Creighton said. Projects under consideration include a water-purification plant in Central America, a power plant in West Africa and toll roads in Brazil, he said.

“Our deal pipeline is full,” Creighton said. “You have all these shovel-ready infrastructure projects that have been stopped in their tracks because the financing from the commercial banks disappeared. We are there to fill the gap.”

As projects multiply, Cordiant is considering hiring investment staff.

“We will be adding a couple of people next year,” Creighton said. “We have some room to expand.”

To contact the reporter for this story: Frederic Tomesco in Montreal at tomesco@bloomberg.net.

To contact the editor responsible for this story: David Scanlan at dscanlan@bloomberg.net