Impulsora del Desarrollo y el Empleo en América Latina, S.A.B. de C.V. (IDEAL), Canada Pension Plan Investment Board (CPPIB) and Ontario Teachers’ Pension Plan have announced that they have entered into a definitive agreement to invest in Pacifico Sur, a 309km toll road in Mexico.

Under the terms of the agreement, IDEAL will retain a 51% ownership of the Guadalajara-Tepic, S.A. de C.V. highway concession (CAGT), the concessionaire of the Pacifico Sur toll road. CPPIB and Ontario Teachers’ together will acquire a 49% minority ownership position for an initial MXN4.539 billion (US$237.7 million), with the possibility of a second payment of up to MXN3.141 billion (US$165.8 million).

CPPIB will hold a 29% stake and Ontario Teachers’ will hold a 20% stake. This is consistent with the investment that the partners made in another Mexican toll road, Arco Norte, in 2016.

Pacifico Sur connects Mexico’s central valley with the country’s northwest region, acting as a critical link between the cities of Guadalajara and Tepic for both commercial transport vehicles and tourism-driven light traffic. The toll road extension also includes two recently opened bypasses around the two cities.

CAGT holds title to Pacifico Sur’s concession granted by the Secretary of Communications and Transport to build, operate, administer, conserve and maintain the Guadalajara-Tepic highway, the Sur de Guadalajara (South Guadalajara) bypass and the Tepic bypass in the states of Jalisco and Nayarit, in the Mexican Republic. The Pacifico Sur concession agreement has 23 years remaining, with the possibility of an extension of up to 30 additional years.

The transaction is subject to customary closing conditions.