GLOBAL – A Canadian pension fund and a private equity arm of US insurer AIG have teamed up to buy InterGen, a power generating joint venture of Shell and Bechtel, for US$1.75bn (€1.3bn).

The C$85bn Ontario Teachers' Pension Plan said it has formed a joint venture with AIG Highstar Capital II to buy InterGen and 10 of its power plants from Shell Generating (Holding) and Bechtel Enterprises Energy.

"This is an excellent opportunity to build on our existing portfolio of power generation assets that we currently own in partnership with AIG,” said scheme vice president Jim Leech.

“As most of the power from these plants is sold under long-term contract, this investment should produce stable and long-term cash flows that are well suited to our growing infrastructure portfolio."

InterGen operates plants in the UK, Netherlands, Mexico, Philippines, China and Australia. The move takes the power capacity of the Ontario Teachers-AIG to 7,000 MW.

Earlier this year the fellow Ontario-based OMERS scheme made a US$40.6m (€35m) investment in Luxembourg-based car industry supplier Honsel International Technologies.

The C$34bn Ontario Municipal Employees Retirement System’s private equity arm - OMERS Capital Partners (OCP) - bought a minority interest in Honsel, which makes components for carmakers.