Canada pension fund goes short on Balfour despite project link

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One of the world’s biggest infrastructure investors is betting against the stock-market performance of Balfour Beatty, the UK’s largest building contractor — despite both playing key roles in the redevelopment of Stratford.

The Canada Pension Plan Investment Board (CPP), Canada’s state-owned pension fund which manages almost C$300 billion (£176 billion) of assets, has built a 0.5% short position worth £10 million in the hope of profiting from a share price decline from the FTSE 250 firm.

It is the first time CPP, which has a stake in the UK’s biggest port operator Associated British Ports, has shorted a British construction or infrastructure company, say Financial Conduct Authority filings.

Unlike most pension funds, CPP and other Canadian funds are active investors and directly back huge infrastructure projects. Both Balfour and CPP have been at the centre of Stratford’s regeneration.

The pension fund bought a 25% stake in Westfield Stratford City in 2010, a year before the shopping centre was opened on the edge of the Olympic Park.

Balfour converted the Olympic Stadium into the new home of West Ham United and was also behind the Olympics Aquatics Centre. CPP declined to comment on its reason for the short.

Balfour’s first-half results last week beat analysts’ forecasts. Broker Numis called it a “turning point” for the company, which has been hit by a series of profit warnings in the past few years.

Carillion, which failed two years ago to merge with Balfour, has been targeted by short-sellers and remains one of the most shorted stocks on the LSE.

It is CPP’s first notable investment decision since the Brexit vote, which it claimed would not affect its outlook for the UK. It yesterday saw ITV ditch its £1 billion bid for eOne, in which it is the largest investor.

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August 26, 2016 |
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