CPP Investments manages approximately $114 billion in assets across Canada. Its holdings span hundreds of companies in sectors including technology, financial services, natural resources, renewables, and infrastructure. This article is part of Mapping Canadian Capital, a new series from CPP Investments Insights Institute. Each installment spotlights an investment from CPP Investments’ Canadian portfolio, offering insight into how a major global capital allocator approaches long-term partnership, value creation, and the complexities of investing in an evolving economic landscape.
Even in the 1990s, when the Greater Toronto Area was home to fewer people and vehicles than today, cross-regional congestion was already a significant problem.
An innovative idea emerged—Highway 407 ETR (Express Toll Route). The world’s first fully electronic open-access toll highway linked up with highways across the GTA network, promising commuters and businesses a faster, more efficient, and more reliable alternative.
The project was groundbreaking and so was its delivery model. A partnership was struck between the Province of Ontario and a consortium of investors. In exchange for completing construction of the remaining 40 km of the roadway (after the province built the initial 68 km), the consortium was granted the rights to operate Highway 407 ETR for 99 years.
CPP Investments joined that consortium via a series of transactions in 2010.
And just as the highway expanded over the years, so did CPP Investments’ financial interest in the asset, due to its combination of scale, long-term, inflation-linked Canadian-dollar cash flows, and a regulatory framework that has been resilient over time.
“The asset ticks all the boxes for us, with a stable long-term outlook and hard-to-find scale, right in our backyard,” said Andrew Alley, Managing Director, Head of Infrastructure, North America and Australasia, Real Assets at CPP Investments.
Driving returns
As a long-term investor, CPP Investments is keenly interested in transportation infrastructure assets like toll roads, which offer scale and stability. And 407 ETR stands out both in Canada and globally for the exceptional long-term advantages it provides investors. With more than 70 years remaining on the lease, 407 ETR offers more than twice the duration of similar infrastructure agreements globally.
Over the years, it has grown to become one of the most successful holdings in CPP Investments’ global infrastructure portfolio.
“With consistently strong financial performance and several decades left on the leasehold, Highway 407 ETR is recognized around the world as a prime asset in the toll road space,” said Alley.
Carrying the load
Drivers have shared in the benefits. Since it opened, usage has surged more than 90%. Even at peak times, traffic moves, and Highway 407 ETR drivers can expect to finish their trips in less than half the time required on alternative routes.
An analysis of journeys between Pearson Airport and surrounding suburbs found commute times were reduced by a quarter to a third. The time savings on some routes were even more dramatic—with trips more than twice as fast as public transit.
“For over 25 years, we’ve been a lifeline for drivers and businesses, getting them out of congestion and to their destinations with a fast, safe, and reliable route,” says Jose Espinosa, President & CEO, 407 ETR.
Drivers now take more than three million trips on Highway 407 ETR every week, saving an estimated 23 million hours annually in travel time.
Highway 407 ETR moves millions of trucks and public transit buses every year. That’s good for business and communities. Indeed, 407 ETR has delivered more than $23 billion worth of socioeconomic benefits since opening in 1999, according to a 2023 report by international consultancy Steer.
Highway 407 ETR’s all-electronic, open access means drivers don’t have to slow down and stop to pay a toll when they get on or off. Instead, their usage is captured by a network of state-of-the-art automated cameras and sophisticated transponders.
This open-access flow, coupled with preventive maintenance, also plays a role in ensuring a safe ride, with lower collision rates recorded on the highway compared to alternatives.
A cleaner commute and a strategic partnership
The open-access design also reduces idling, with fewer bottlenecks leading to better fuel economy and lower emissions. Every year, Highway 407 ETR helps avoid more than 100 million kilograms of CO₂ emissions.
“We’re driven by our commitment to making a positive impact in the communities we serve,” Espinosa said. “From reducing traffic congestion and emissions to supporting local charitable causes, we take pride in connecting people and businesses across this vibrant region.”
Espinosa says CPP Investments has been “invaluable” to operations, and credits it for enabling a longstanding exchange of expertise.
“CPP Investments, in partnership with the other 407 ETR shareholders, brings an international perspective which helps shape the company’s strategic direction, ensuring we remain innovative and aligned with global best practices,” Espinosa said.
That close collaboration has extended to multiple areas, leading to adjustments in the company’s capital structure, advancements in cybersecurity, and the use of data analytics to enhance operational efficiency.
Sustainability efforts offer a further example of that partnership in action. In 2023, 407 ETR was selected as one of CPP Investments’ first trials for its decarbonization initiative to reduce emissions over time.
An initial assessment revealed opportunities to reduce emissions by continuing 407 ETR’s fleet electrification efforts, introducing energy-efficient lighting upgrades, and incorporating renewable energy options. The results were instrumental to the development of 407 ETR’s multi-year GHG emissions reduction roadmap. It currently serves as a guide for the implementation of mitigation strategies in 407 ETR’s 2030 emissions reduction target.
“CPP Investments has provided a lot of guidance and direction for the roadmap we have today,” Espinosa said.
That roadmap is now informing similar sustainability efforts across CPP Investments’ broader global highway portfolio, which includes assets in Australia, India, Chile, and the United States.
Around the world, user-pay infrastructure frequently encounters public skepticism. Yet the 407 presents a rare alignment of benefits: each toll not only funds faster, more reliable travel, it also contributes to the long-term investment returns that help secure Canadians’ retirement through the Canada Pension Plan.
Why CPP Investments backed 407 ETR:
Scale and strategic fit: Large scale and long-term cash flows align with the Fund’s mandate for resilient, stable-return infrastructure assets.
A durable asset with decades of value ahead: A vital GTA corridor with 70+ years remaining on the lease—offering decades of dependable value.
Sustainability mindset: Active investments in fleet electrification, decarbonization and energy-efficient upgrades.
Technology at the core: Fully electronic tolling, strong cybersecurity, and invaluable data analytics position Highway 407 ETR among the most technologically advanced toll roads.
A platform for learning and partnership: CPP Investments works closely with 407 ETR’s management team and co-investors to exchange insights, shape strategy, and apply lessons across similar infrastructure assets worldwide.
Sustaining Strength: How Strategic Capital Supports Canadian Resource Leadership
Canada is an energy powerhouse—and Canadian Natural Resources Limited is one of its strongest engines.
Seeding the Future: Radical Ventures and the Rise of Canadian AI
CPP Investments manages approximately $114 billion in assets across Canada. Its holdings in hundreds of companies span sectors such as
How Octopus Energy is Revolutionizing Renewables and Reshaping Utilities
In just nine years, British renewables company Octopus Energy has become the United Kingdom’s largest energy supplier.
Please enter valid email id