CPPIB, OTPP and PSP Complete Big Deals
Canada Pension Plan Investment Board (CPPIB) and Ontario Teachers’ Pension Plan Board (OTPP) have completed the tender offer period to purchase 40% of the shares of Impulsora del Desarrollo y el Empleo en América Latina, S.A.B. de C.V. (IDEAL) (BMV: IDEAL B-1).CPPIB put out a press release on the completion of this infrastructure partnership:
The acquired shares will be transferred to CPPIB and OTPP on April 17 and the tender offer will formally settle on April 23.
CPPIB will own a 23.7% interest in IDEAL and OTPP will own a 16.3% stake. The current majority owners of IDEAL’s outstanding shares will continue to hold a majority shareholding in the company.
IDEAL is a sizable and important investment that provides exposure to existing and future infrastructure projects throughout Mexico. IDEAL’s portfolio includes 18 infrastructure concessions in Mexico (13 toll roads, three logistics terminals and two wastewater treatment plants), as well as an electronic toll collection service business and an operations business. IDEAL, Ontario Teachers’ and CPP Investments are already partners in the Arco Norte and Pacifico Sur toll roads.
As part of the arrangement, CPPIB and OTPP together with IDEAL will form an infrastructure investment trust known locally in Mexico as a FIBRA-E (Fideicomiso de Inversión en Energía e Infraestructura). The FIBRA-E structure was introduced in Mexico in 2015 to encourage private-sector investment in infrastructure projects.
The FIBRA-E will subsequently be funded by IDEAL, CPPIB and OTPP. FIBRA-E will be managed by a subsidiary of IDEAL and purchase partial stakes in four of IDEAL’s toll roads: Arco Norte, Chamapa – La Venta, Toluca Bypass and Tijuana – Tecate.
CPPIB and OTPP intend to reduce its stakes to minorities in the FIBRA-E following a secondary offering to other investors.
Canada Pension Plan Investment Board (“CPP Investments”) and Ontario Teachers’ Pension Plan Board (“Ontario Teachers’”) today announced the completion of the tender offer period to purchase 40% of the shares of Impulsora del Desarrollo y el Empleo en América Latina, S.A.B. de C.V. (BMV:IDEAL B-1, “IDEAL”). This step concludes the shareholders’ acceptance of the offer of affiliates of Ontario Teachers’ and CPP Investments to purchase the shares of IDEAL.I've already covered this deal in November 2019 here. No need repeating myself except to say if you're going to invest big in Mexico, it's best to have Carlos Slim's conglomerate as a trusted partner.
In accordance with Mexican law, the acquired shares will be transferred to CPP Investments and Ontario Teachers’ on April 17 and the tender offer will formally settle on April 23.
The acquisition, which was first announced in November 2019, follows a tender offer in the Mexican stock exchange on March 18 for shares in IDEAL at MXN$43.96 per share. CPP Investments will own a 23.7% interest in IDEAL alongside a 16.3% stake owned by Ontario Teachers’. The current majority owners of IDEAL’s outstanding shares will continue to hold a majority shareholding in the company.
IDEAL is a sizable and important investment that provides exposure to existing and future infrastructure projects throughout Mexico. IDEAL’s portfolio includes 18 infrastructure concessions in Mexico (13 toll roads, three logistics terminals and two wastewater treatment plants), as well as an electronic toll collection service business and an operations business. IDEAL, Ontario Teachers’ and CPP Investments are already partners in the Arco Norte and Pacifico Sur toll roads.
As part of the arrangement, a subsidiary of IDEAL will form an infrastructure investment trust known locally in Mexico as a FIBRA-E (Fideicomiso de Inversión en Energía e Infraestructura). This FIBRA-E is subject to certain transaction steps and filings that are yet to be finalized. The FIBRA-E will subsequently be funded by IDEAL, CPP Investments and Ontario Teachers’, through certain affiliates. This is expected to occur before the end of April. The FIBRA-E structure was introduced in Mexico in 2015 to encourage private-sector investment in infrastructure projects.
As previously announced, the FIBRA-E will be managed by a subsidiary of IDEAL and purchase partial stakes in four of IDEAL’s toll roads: Arco Norte, Chamapa – La Venta, Toluca Bypass and Tijuana – Tecate. Following the completion of this funding, a secondary offering led by CPP Investments and Ontario Teachers’, through certain affiliates, will reduce their ownership to minority positions, while also introducing other investors.
About CPP Investments
Canada Pension Plan Investment Board (CPP Investments™) is a professional investment management organization that invests the funds not needed by the Canada Pension Plan (CPP) to pay current benefits in the best interests of 20 million contributors and beneficiaries. In order to build diversified portfolios of assets, investments in public equities, private equities, real estate, infrastructure and fixed income instruments are made by CPP Investments. Headquartered in Toronto, with offices in Hong Kong, London, Luxembourg, Mumbai, New York City, San Francisco, São Paulo and Sydney, CPP Investments is governed and managed independently of the Canada Pension Plan and at arm’s length from governments. At December 31, 2019, the CPP Fund totalled C$420.4 billion. For more information about CPP Investments, please visit www.cppinvestments.com or follow us on LinkedIn, Facebook or Twitter.
About IDEAL
IDEAL is an independent publicly traded company listed on the Mexican Stock Exchange (IDEALB1.MX). IDEAL engages in the development, promotion, operation and administration of infrastructure projects in Mexico and Latin America. IDEAL is one of the largest infrastructure companies in Latin America, with 18 infrastructure concessions in different sectors, including toll roads, water and logistics terminals.
About Ontario Teachers’
The Ontario Teachers’ Pension Plan Board (Ontario Teachers’) is the administrator of Canada’s largest single-profession pension plan, with $207.4 billion in net assets (all figures at December 31, 2019). It holds a diverse global portfolio of assets, approximately 80% of which is managed in-house, and has earned an annual total-fund net return of 9.7% since the plan’s founding in 1990. Ontario Teachers’ is an independent organization headquartered in Toronto. Its Asia-Pacific region office is located in Hong Kong and its Europe, Middle East & Africa region office is in London. The defined-benefit plan, which is fully funded, invests and administers the pensions of the province of Ontario’s 329,000 active and retired teachers. For more information, visit otpp.com and follow us on Twitter @OtppInfo.
This morning, Mexico’s central bank delivered a second emergency interest rate cut and promised measures to boost liquidity amid a looming recession caused by the coronavirus outbreak and a plunge in oil prices:
Banco de Mexico reduced the benchmark rate by 50 basis points to a three-year low of 6% at an unscheduled meeting on Tuesday. Officials had already surprised markets with a half-percentage point cut on March 20.You might be wondering why CPPIB and OTPP went through on this deal given the current circumstances. COVID-19 is ravaging Mexico's hospitals, the country just marked its deadliest day amid coronavirus lockdown and the rout in oil is impacting its economy.
The decision to repeat an unscheduled rate reduction by one of the world’s most hawkish central banks reflects the uncertainty surrounding the Mexican economy. Economists forecast gross domestic product will contract 5% this year, with some top banks predicting a fall of as much as 9%.
“Considering the risks resulting from the COVID-19 pandemic for inflation, economic activity and financial markets, major challenges arise for monetary policy and for the economy in general,” the statement read. “The negative effects on domestic economic activity resulting from the pandemic may lead to an important contraction of economic activity.”
But this deal was signed back in November and both OTPP and CPPIB see it as a long-term infrastructure play in an economy which will grow rapidly over the next decade (after this pandemic subsides).
There's no doubt, however, that Carlos Slim is reaping the big gains in the short run:
But Slim will still retain a majority stake in this entity, aligning his long-term interests with those of CPPIB and OTPP.
In another recent deal, Public Sector Pension Investment Board (PSP Investments) and the Alberta Teachers’ Retirement Fund Board (ATRF) completed the acquisition of AltaGas Canada Inc. (ACI) (TSX: ACI) at $33.50 per share for total consideration of $1.005 billion.
PSP put out a press release on this deal:
Calgary and Edmonton, Alberta; Montréal, Québec (March 31, 2020) – AltaGas Canada Inc. (“ACI”) (TSX: ACI), the Public Sector Pension Investment Board (“PSP Investments”) and the Alberta Teachers’ Retirement Fund Board (“ATRF”) are pleased to announce the completion today of the acquisition of all of the 30,000,000 common shares of ACI (“Common Shares”) by PSPIB Cycle Investments Inc. (the “Purchaser”), a wholly-owned subsidiary of TriSummit Cycle Holding Inc. (“Holdco”), in an all-cash transaction pursuant to a plan of arrangement (the “Arrangement”) under Section 192 of the Canada Business Corporations Act (the “CBCA”). The Purchaser acquired each Common Share for $33.50, for total consideration of $1.005 billion.I looked at TriSummit Utilities and it's a solid company providing clean energy to its clients.
Mr. Jared Green, ACI's President and Chief Executive Officer, commented:
“We are excited to have this transaction close and to have the support of both PSP Investments and ATRF as we move forward with the execution of our strategy. We have numerous growth opportunities in front of us and a solid financial footing to be able to deliver on them.”
With the Arrangement now complete, the Common Shares will be delisted from the Toronto Stock Exchange in the coming days.
Corporate Name Change
In connection with the completion of the Arrangement, ACI’s name will be changed to TriSummit Utilities Inc.
TriSummit Utilities Inc. will remain incorporated under the CBCA, with its headquarters located in Calgary, Alberta. While TriSummit Utilities Inc. will not have its securities listed on any stock exchange, it will continue to be a reporting issuer under applicable Canadian securities laws because its public debt remains outstanding.
“Changing our name to TriSummit Utilities Inc. is a reflection of the next step for our organization while providing acknowledgment to our three utilities which are the foundation of our company,” added Mr. Green. “Most importantly, we will continue to deliver the same safe, reliable and affordable service to our customers while continuing the strong relationships we have built with our regulators.”
Board of Directors
David W. Cornhill, Gregory A. Aarssen, Judith Athaide, Amit Chakma, William J. Demcoe and Jared Green will continue as Directors of ACI following completion of the Arrangement and Mr. Cornhill will remain as Chair of the Board. All of ACI’s officers will continue in their positions.
Mr. David Cornhill, ACI’s Chair of the Board, commented:
“On behalf of the Board, I would like to extend my sincere thanks and best wishes to Corine Bushfield, who has resigned from ACI’s Board of Directors. I am pleased to see good continuity with the Board of Directors and Management and welcome the new Directors. Finally, I would like to congratulate the team at ACI, PSP Investments and ATRF on the completion of the Arrangement, which I believe is a positive outcome for all stakeholders.”
In connection with the completion of the Arrangement, ACI also announces the following four new Directors: Dietz Kellmann, Samuel Langleben, Patrick Chabot and Jason Munsch.
Dietz Kellmann is the President and Chief Operating Officer of Global Remediation Technology, and President of DCLK Consulting Corp. Dietz also serves as a Director of Doyon Utilities, LLC. He holds a Bachelor of Arts (Honours) in Economics from the University of Western Ontario, a Master of Arts in Economics from the University of Western Ontario, and a Master of Business Administration from Simon Fraser University. He is a member of the Institute of Corporate Directors.
Sam Langleben is a Director, Infrastructure Investments, at PSP Investments. He holds a Masters in International Energy Policy Management from Columbia University’s School of International & Public Affairs, and a Bachelor of Commerce from McGill University.
Patrick Chabot is a Director, Infrastructure Investments, at PSP Investments. He is a CFA Charterholder and holds a Master of Science in Finance and a Bachelor of Business Administration from Laval University.
Jason Munsch is Head of Infrastructure at ATRF. He is a CFA Charterholder, holds an ICD.D designation, a Master of Business Administration from the University of Calgary and a Bachelor of Commerce from the University of Alberta.
Details regarding the Arrangement are set out in ACI’s management information circular and proxy statement dated November 19, 2019, a copy of which can be found under ACI’s profile on SEDAR at www.sedar.com.
The purpose of the Arrangement was to enable the Purchaser to acquire 100% of the Common Shares. Immediately prior to the completion of the Arrangement, neither the Purchaser nor Holdco directly or indirectly owned any securities of ACI.
Its vision is to be the clean energy supplier of choice in each of the jurisdictions in which it operates through being a leader in safety, reliability, cost effectiveness and customer service.
Moreover, the company’s strategy is focused on delivering safe, reliable, clean and cost-effective energy solutions to customers while achieving long-term profitable growth.
Now, given the rout in oil, people will wonder why didn't PSP and ATRF wait till now to strike this deal?
Again, this deal was signed back in October of last year, it's just being completed and nobody could have predicted a pandemic would strike and oil would fall off a cliff.
These deals cannot be viewed over a year, they need to be viewed over a decade.
It's also important to note that PSP's infrastructure team doesn't just invest in renewable energy but across a gamut of assets including toll roads, airports, ports (transportation assets have been hit) and digital (which have not hit and are booming from this).
Apparently, PSP did sell its stake in Athens airport back in October and that was a good (albeit fortuitous) move given they likely got a nice price for their stake right before this pandemic hit (if this sale went happened, not sure).
PSP also announced some smaller deals recently. It made a strategic investment in SitusAMC, a leading provider of services and technology supporting the real estate finance industry.
SitusAMC, the leading provider of services and technology supporting the real estate finance industry, today announced that The Public Sector Pension Investment Board (PSP Investments) has made a strategic investment in the firm. PSP Investments joins Stone Point Capital, who remains the largest shareholder in SitusAMC. Additional shares are held by SitusAMC’s management team.And more recently, PSP financed a $100 million deal to Reflexion for cancer treatment commercialization:
“We are thrilled to partner with PSP Investments as we look to transform the real estate finance industry,” said Michael Franco, CEO of SitusAMC. “Having long-term capital partners such as PSP Investments and Stone Point Capital will be a driving force for our company through market cycles as we continue to help our clients identify and capture opportunities across the entire lifecycle of their commercial and residential real estate activity.”
“SitusAMC has a bold vision for their industry, supported by a proven leadership team, a strong operational foundation, and world-class services and technology offerings. We look forward to supporting the team, alongside Stone Point, in its next phase of growth,” said Martin Longchamps, Managing Director, Private Equity, PSP Investments.
Chuck Davis, CEO of Stone Point Capital, added, “We are pleased to be partnering with PSP Investments and look forward to working alongside them to support the long-term growth and development of SitusAMC.”
About SitusAMC
SitusAMC (www.situsamc.com) is the leading independent provider of advisory, strategic outsourcing, talent and technology solutions to the commercial and residential real estate finance industry. The firm helps clients realize opportunities in their real estate businesses through industry-leading services and innovative technologies that drive operational efficiency, increase business effectiveness, and improve market agility across the entire lifecycle of their global real estate activity.
RefleXion Medical, a therapeutic oncology company pioneering the use of biology-guided radiotherapy (BgRT) for all stages of cancer, today announced the close of a $100 million equity financing led by Public Sector Pension Investment Board (PSP Investments), one of Canada’s largest pension investment managers that focuses on long-term investments with partners demonstrating strong value orientation strategies.Exciting stuff and if this technology proves successul in trials, it will revolutionize late-stage cancer treatment, and PSP will be part of it.
“RefleXion’s bold vision for the future of cancer care stands to completely reshape how physicians think about treating patients with stage 4 cancer,” said Loïc Julé, managing director, Global Investment Partnerships Portfolio, PSP Investments.“This is exactly the mindset of companies we strive to build long-term relationships with. We are thrilled to support RefleXion during this next phase of their growth as they ramp up market and clinical adoption of this groundbreaking technology.”
RefleXion’s existing investors, TPG’s The Rise Fund, KCK Group, Sofinnova Partners, Venrock, T. Rowe Price, and global pharmaceutical leaders, Pfizer Ventures and Johnson & Johnson Innovation, JJDC Inc., all participated in the round. BofA Securities and Morgan Stanley & Co., LLC acted as placement agents for the company.
“This new influx of capital continues our momentum initiated first by FDA clearance of the RefleXion™ X1 platform last month, then quickly followed by the close of our first system order at one of the world’s leading cancer centers,” said Todd Powell, president and CEO of RefleXion. “The support of this top-tier investment syndicate enables us to further scale operations around commercializing the X1 platform.
“Moreover, these funds allow us to validate the practical implications of using BgRT on a daily basis as we transform radiotherapy from early-stage cancer treatment to an option for patients with all stages of cancer,” continued Powell.
The RefleXion X1 machine with BgRT is designed to overcome the technical limitations that currently restrict radiotherapy to one or two tumors. When available, RefleXion will scale BgRT to treat all visible tumors, even those that move rapidly due to bodily functions such as breathing or digestion, in the same treatment session.
RefleXion recently announced FDA clearance for stereotactic body radiotherapy (SBRT), stereotactic radiosurgery (SRS) and intensity modulated radiotherapy (IMRT), and its first clinical and commercial client.
About RefleXion Medical
RefleXion is a privately-held company developing the first biology-guided radiotherapy system, a significant change in strategy from single tumor therapy to the ability to one day treat multiple tumors in the same treatment session in cancers that have metastasized. Currently, the RefleXion X1 machine is cleared for the delivery of stereotactic body radiotherapy (SBRT), stereotactic radiosurgery (SRS) and intensity modulated radiotherapy (IMRT). The company is also developing BgRT, which incorporates positron-emission tomography (PET) imaging data to enable tumors to continuously signal their location. The BgRT technology will synchronize these data with the linear accelerator to direct radiotherapy to tumors with subsecond latency.
Lastly, the horrific crime in Nova Scotia has left every Canadian sad and distraught.
Among the 18 innocent victims was Heidi Stevenson, a 23-year veteran of the Royal Canadian Mounted Police:
A GoFundMe account was launched in support of Const. Heidi Stevenson’s husband, and their two adolescent children. The online fundraiser set out to raise $10,000. Within a day, more than $58,000 in donations poured in (the organizer has currently disabled new donations to this fundraiser).
Messages of condolence for the family can be sent to RCMP.Condolences-Condoleances.GRC@rcmp-grc.gc.ca
I join PSP in thanking law enforcement members and first responders who stepped in to ensure the community's safety and along with millions of Canadians, want to also express my deepest sympathies to all the families for this traggic loss of innocent lives.
We thank law enforcement members and first responders who stepped in to ensure the community’s safety and well-being in Portapique, Nova Scotia. We acknowledge their unwavering dedication and we honour the strength and resilience of the people of Nova Scotia. pic.twitter.com/fI5PmijWhb— InvestPSP (@InvestPSP) April 20, 2020
We live in a crazy world and let's hope we never see such a horrific killing spree ever again.
Below, the New York Times reports as much of the world shuts down amid the worsening coronavirus pandemic, Mexico City’s streets are bustling and the country’s president insists on calm. “This is going to be as bad as Italy or worse,” says once concerned doctor. Let's hope he's wrong.
Also, Global News reports a rural Nova Scotia community is coming to terms with the tragic shooting that happened over the weekend. We are learning more about the 18 innocent lives that were lost in this senseless tragedy.
The RCMP just released new details of a mass shooting in Nova Scotia. RCMP say they now believe 22 victims died, in addition to the gunman.
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