Lend Lease awarded NorthConnex tunnel

Canada Pension Plan Investment Board (CPPIB) will provide AUD 525M for the project that will provide a link between the southern end of the M1 Pacific motorway at Wahroonga to the Hills M2 motorway at its existing Pennant Hills Road interchange.

The investment gives CPPIB a 25 per cent stake in the road. The pension fund also owns a 25 per cent interest in the Westlink M7 toll road in Sydney, through its acquisition of Intoll Group in 2010.

Lend Lease is in a JV with Bouygues Construction to deliver the project on behalf of client Transurban, which will operate the road. Transurban will own 50 per cent of the project while Queensland Investment Corporation will hold the remaining 25 per cent.

ATS reported: "The contract comes as Lend Lease and its consortium partners are locked in discussions with the new Andrews Labor government, which abandoned the controversial East West Link project promoted heavily by the Napthine Liberal government.

"It is reported that Lend Lease and its consortium partners are willing to cut a deal to cover their bid costs for the East West Link as well as other costs the consortium had notched up. However, the consortium led by the Commonwealth Bank is believed to be holding out for a much larger deal after the outgoing Liberal treasurer Michael O'Brien included a poison pill in the contract that was signed just days ahead of the state election the party was widely expected to lose.

"There are at present no plans to abandon the NorthConnex project, despite wide community concerns."

Spanning 9km, NorthConnex will be the longest road tunnel project in Australia. Construction of the tunnel will begin in early 2015 and should complete in 2019.

"We are excited to be part of this important motorway development project, which is in line with our strategy to invest in attractive global infrastructure opportunities," CPPIB head of infrastructure Cressida Hogg said. "The NorthConnex tunnel will create a vital link in Sydney that will play a significant role in ¬alleviating traffic congestion. We look forward to working together with an experienced toll road operator in Transurban and a well-aligned, long-term investor in QIC."

The project win will come as a boon to Lend Lease, which has been looking to build its infrastructure business. Ahead of winning the NorthConnex contract, Lend Lease was working on five infrastructure projects with an estimated capital spend of AUD 4.1bn.