How Ottawa's nation building agenda is reshaping infrastructure capital

Each month at BPM, we offer a slate of articles and content pieces that go deep on a particular topic. This month, we're exploring alternatives as an asset class, with a focus on infrastructure in institutional portfolios. 

Canada's nation-building agenda has become a fixture of political rhetoric, but for institutional investors the real question is whether it can produce bankable projects.

Andrew Hay has spent years engaging with governments around the world - from Mexico to Germany and Canada - on how to attract private capital into infrastructure. He frames Ottawa's nation-building agenda by distinguishing sectors where private capital is essential and those where it faces structural barriers.

"When it comes to nation building, what I think institutional investors might want to think about, is long duration systems that have to work under a combination of political affordability and social constraints," said Hay, head of global infrastructure investments at RBC GAM, noting the most investable parts of Canada’s nation‑building agenda sit in power and grids, digital infrastructure, and transport, because that’s where real project pipelines exist. They’re also sectors where public balance sheets can't shoulder the burden alone and where private sector innovation matters.

He believes power is particularly complex because ownership is split across federal, provincial, and municipal levels, a fragmentation seen in other countries as well. Additionally, power demand is rising after two decades of stagnation, driven by AI, electrification, and population growth rather than ideology. Digital infrastructure, including data centres and fibre, is gaining priority as data sovereignty becomes a national concern.

"We're actually at a stage now where they're calling for increases in power, whereas the last 20 years, power demand was kind of flat because the incremental demand was offset by all those energy efficient tools that we had," he said.

The real constraint on investment, Hay argues, is not the capital but rather "more around having projects that have a clear execution pipeline and also meet the right affordability hurdles as well," he said, adding that true investment opportunities emerge where "long duration systems" can function under political and social constraints that are challenging but not insurmountable.

When asked about regional development, he emphasized that what needs to be built varies by province, but how it gets financed should not, noting that energy security and connectivity are priorities everywhere. He argues that institutional capital flows best when regional development goals align naturally with long-term asset economics.

"The better outcomes here are going to evolve, naturally, where the regional development goals are aligned with the long-term asset economics for investors like us. Not when you try to break that relationship and force one upon the other," he said.

Olga Bitel sees infrastructure capital flowing first toward connecting Canada's coasts and strengthening import-export capacity, then toward improving domestic movement of goods.

But the larger opportunity, in her view, sits in the Arctic as she highlights two trends that are converging there. Climate change is thinning ice and extending navigable windows, while advances in shipping technology are making Arctic routes viable.

“You're now able to navigate and travel from China to Canada via the North Pole. That’s a 40 per cent shorter distance. Think about how much time you're saving, how much fuel you're saving, how much you're saving in insurance and import-export costs. These are tremendous savings. And this will only get cheaper, even if we can arrest global warming,” said Bitel, global strategist at William Blair.

The north also holds vast resource reserves that remain expensive and difficult to extract today, she added. As technology evolves, however, environmentally conscious extraction with minimal human risk becomes more feasible. These are resources few other nations can replicate, giving Canada a strategic position that carries real geopolitical weight.

“Canada can potentially hold a lot of sway in determining how these relations evolve. But it's through your economic capacity building, like growth and investment opportunities that capital can be unlocked,” she said.

Hay argues that successful infrastructure investment in regional and Indigenous communities depends on local ownership and governance, emphasizing that it doesn’t just matter for Indigenous communities but for any community where projects are being developed. Additionally, scale comes from aggregating smaller projects into larger structures that deliver economies worth pursuing while partnerships reinforce both elements by bringing management efficiency and stronger governance.

Historically, institutional investors have mostly accessed Canadian infrastructure through ongoing partnerships with provinces and crown entities, rather than through auctions or one‑off greenfield deals. Hay’s view is that Canada is not short of capital; the real shortfall is in scalable, repeatable projects that can be rolled out again and again in a consistent framework. What long‑term investors are looking for, he suggests, is a combination of scale, sensible risk sharing, transparency, and predictable economics that works for both governments and private capital.

He notes that although Canada saw a surge of public‑private partnerships in the early 2000s, especially in Ontario, the overall number of PPPs is still lower than many external observers would expect. He links this to intense public scrutiny, very long approval timelines, and the way “public‑private partnership” has become politically loaded, even as governments relabel the same structures under new acronyms. The underlying model, as he sees it, is still about designing projects so that risks sit with whichever party is best equipped to manage them.

He traces the evolution of Canada's PPP model from demand-risk structures, where private investors bore the risk of usage volumes, to availability-based payments backed by government.

Under the newer model, revenue certainty is high and demand risk disappears, noting that it doesn't matter how many drivers use a toll road, only that the road is operational. For example, he points to the Sea to Sky Highway, noting that government-backed counterparty makes these deals low risk and highly credit-worthy, which in turn allows significant leverage and a smaller equity commitment.

The result is an A-rated investment profile that first attracted life insurance companies treating infrastructure as a substitute for fixed income.

While the larger Canadian pension plans, including the Maple Eight, have entered the space, they tend to operate at a scale that limits the available opportunity set, noted Hay. The real unlock lies in broadening access beyond institutions.

"The individual access point is not something that has been as well tapped into as it might be in the future," he said. "You need a structure that both protects the investor but also empowers them to get into these things.”

"The opportunity for the Canadian institutions isn't to chase the innovation per se. It's more to invest in and underwrite the systems that allow the innovation to function," he said, underscoring while venture capital is difficult to scale, Canada's strengths lie in deep experience with long-duration regulated assets, complex stakeholder environments, and a model of transparency that builds public confidence.

“The nation building concept is fundamentally less constrained by capital and more constrained by the execution capability, by the social license and the affordability. When you understand the interplay of that, that's really where you're going to get investors that do well in this environment,” noted Hay.