CDPQ Sells 20% Stake in Plenary's Asia Pacific Business to ADQ
ADQ, an Abu Dhabi state-owned investment company, has purchased a 49% stake in global public infrastructure group Plenary for an undisclosed price, believed to be around A$1bn (€609m).
Canadian institutional investor CDPQ is selling its 20% stake. The remaining 29% interest in the Melbourne, Australia-based firm is held by Plenary founders and executives.
As part of the partnership, Plenary and ADQ will establish a co-development and investment platform to focus on public and social infrastructure investments in high-growth geographies, including the Middle East and Central Asia.
ADQ will invest primary capital in Plenary to accelerate its growth in Australia, the Middle East, Asia, Europe.
Plenary chair John O’Rourke said: “We have a strong strategic alignment with ADQ. The partnership will accelerate our growth in Australia and internationally, and the Middle East co-development and investment platform will unlock significant opportunity and value for both companies.”
Plenary has been growing its business in the Middle East after establishing a presence in 2022, when it won the UAE’s first schools infrastructure private-public partnership, the Zayed City Schools project.
ADQ deputy group CEO Hamad Al Hammadi said: “This collaboration, marking our inaugural venture in Australia, underscores ADQ’s commitment to developing partnerships that complement our investment strategy, which aims to create long-term value and generate sustainable financial returns.”
He added: “ADQ’s existing portfolio of infrastructure assets, many of which are emerging as national champions, will serve as a catalyst to leverage significant potential of public-private partnership projects together with Plenary, a leader in its field with a proven track record of delivering successful infrastructure projects globally.”
CDPQ executive vice-president and head of infrastructure Emmanuel Jaclot said: “Since we began our partnership with Plenary Group in 2012, the company has experienced significant growth. We are pleased to retain our investment in many of Plenary’s Australian assets and look forward to exploring new opportunities alongside the company.”
CDPQ will retain its 90% stake in the separate Plenary Americas business which is not subject to this transaction. The Canadian institution has invested more than A$500m in a variety of Plenary projects since 2012.
Plenary will remain majority-owned and controlled by its Australian founders and senior management team and retains operational independence.
Founded in Australia in 2004 by John O’Rourke, Ray Wilson, Paul Oppenheim and Jim Cox, Plenary manages a global portfolio worth A$32bn.
Jenny Wiggins of the Australian Financial Review also reports Plenary Group sells 49% stake to sovereign wealth fund ADQ in $1b deal:
Founders and some executives of infrastructure investor Plenary Group will receive a cash windfall after the Australian group sold a 49 per cent stake to Abu Dhabi sovereign wealth fund ADQ in a $1 billion deal.
John O’Rourke, co-founder and chairman of Plenary, said Canadian pension fund Caisse de depot et placement du Quebec (CDPQ) would sell its 20 per cent stake to ADQ, allowing existing investors to pocket some cash.
“It’s a very material transaction for Plenary and it’s going to give us significant balance sheet capacity,” Mr O’Rourke told The Australian Financial Review.
Mr O’Rourke decline to specify how much money existing investors would receive, saying that while there would be “a small liquidity event” for founders, management and staff, the biggest part of the deal would be funds to expand Plenary’s business.
Plenary is owned by three of its four initial founders including Ray Wilson and Paul Oppenheim. Five executives, including chief executive David Lamming and chief investment officer Paul Crowe, comprise five additional key shareholders, while other staff have small shareholdings.
The eight-person core shareholding group will retain its majority stake of 51 per cent and the founders intend to hang onto their stakes for several years, Mr O’Rourke said. “We see this as a five-year opportunity.”
Raising capital had been at the forefront of the board’s mind for the past 12 to 18 months, he added. “The suite of opportunities that we’re seeing from an equity investment point of view was growing and our team’s capacity to pursue these opportunities was there.”
But Plenary wanted to strengthen its balance sheet to give it firepower to pursue more investments, particularly in emerging markets in Asia and the Middle East, Mr O’Rourke said. Plenary hired advisers late last year to find a new investor.
Formed in 2018, ADQ is an Abu Dhabi-based investment and holding company which manages assets, including airline Etihad, that help diversify the UAE’s income beyond oil and has been making acquisitions to ensure the emirates’ “self-sufficiency”.
ADQ deputy group CEO Hamad Al Hammadi said the Plenary investment would be the company’s first venture in Australia.
CDPQ will remain the majority shareholder of Plenary’s Americas business. Plenary sold its North American operations to CDPQ in early 2020.
Mr O’Rourke argued that Plenary did not feel under pressure to grow amid broader consolidation in the infrastructure sector, including Blackrock’s $19 billion acquisition of Global Infrastructure Partners.
“We think we’ve got ample capacity. This transaction is about making sure that we create these opportunities as we originate new projects.”
Mr O’Rourke also said he was not worried by the war in the Middle East and the potential for broader regional conflict, arguing that Australia is committed to close economic relations with the United Arab Emirates and that Plenary takes a long-term view with its investments.
Plenary finances and develops a broad range of infrastructure projects, which have included the Gold Coast Light Rail, the Sydney Metro, and the Melbourne Convention and Exhibition Centre. Current projects include developments at Melbourne’s new Footscray Hospital and La Trobe University.
The deal requires approval from the Foreign Investment Review Board and is expected to take several months to complete.
Plenary has 21 assets under management across Australia and the Middle East worth more than $32 billion and has operated in the Middle East since 2022.
Keep in mind, it was exactly four years ago that Plenary sold its North American business to CDPQ:
Infrastructure investment group Plenary will bid for more projects in Australia and Asia after reaching a deal to sell its North American operations to Canadian pension fund Caisse de dépot et placement du Québec (CDPQ),
CDPQ has had 20 per cent stake in Plenary's Asian Pacific operations since 2016 but has not had any direct exposure to its North American projects, which include bridge, tollroads and hospitals.
It is understood that CDPQ approached Plenary to buy the North American business, and that Plenary welcomed the chance to snare capital to invest in more projects in Australia, including more stages of the Sydney Metro.
Plenary has a 10 per cent stake in the first stage of Sydney's Metro North West as part of the Northwest Rapid Transit consortium.
In November, the consortium reached a $3.7 billion deal with the NSW government to extend their contract to the next stage, allowing it to to operate the North West as well as City and Southwest lines until 2034.
Plenary is currently bidding on five transactions, including Melbourne's $15.8 billion North East Link road project where it is part of a consortium led by John Holland, and Melbourne's new Footscray Hospital.
The investment group, which says the North American sale is not related to the coronavirus outbreak or stock market plunge, expects ongoing government spending to boost the economy will lead to more investment in social infrastructure projects like schools and hospitals.
Plenary will retain a stake of just over 10 per cent in its North American business while CDPQ will keep its 20 per cent stake in Plenary's Asia Pacific business.
CDPQ already owns stakes in electricity network TransGrid and the Port of Brisbane and spent $167 million in November buying a 24.9 per cent equity stake in the public-private partnership contract to build, operate and maintain the Sydney Metro alongside Plenary.
The Canadian group, which likes investing in electrified transport systems because they help the group meet targets for lowering its carbon footprint, has also been pitching its own public transport projects in its Montréal home.
It is developing, building and operating the $C6.3 billion ($7 billion) Réseau express métropolitain (REM), a 67-kilometre automated light rail network that is scheduled to open in 2021.
The sales of Plenary's North American business is expected to take about six months to complete because government approvals will be needed to transfer projects to CDPQ.
Clearly Plenary is an important partner of CDPQ's and they know each other extremely well.
CDPQ remains committed to Plenary's Americas business and this latest transaction doesn't impact that business.
The sale of the 49% stake in the Asia Pacific Business allows Plenary to pursue new opportunities with another strong partner, Abu Dhabi sovereign wealth fund ADQ.
Plenary has been growing its business in the Middle East after establishing a presence in 2022, when it won the UAE’s first schools infrastructure private-public partnership, the Zayed City Schools project.
Now, along with ADQ, it will be able to grow its business there and CDPQ will use the proceeds from this sale to invest in infrastructure opportunities they see.
There is a lot of selling going on these days at Canada's large pension funds, be it private equity stakes at the secondaries market or other sales.
This is done purposely to raise cash and be ready to seize opportunities as market dislocations arise.
Below, Paul Oppenheim, CEO, Plenary Group's address at IPA's Australia-Canada Infrastructure Symposium 2017.
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