Busy November at PSP Investments?

It's been a busy month at PSP Investments so I decided to do a recap. At the beginning of the month, Benefits Canada reported, AIMCo, BCI, PSP close agreement to affiliate timber investments:

The Alberta Investment Management Corp., the British Columbia Investment Management Corp. and the Public Sector Investment Board have closed a previously announced plan to conglomerate their long-term timber investments.

Originally announced in August 2018, the agreement affiliates timber investments TimberWest Forest Corp. and Island Timberlands Ltd. Partnership. Moving forward, the two organizations will continue as standalone companies, but share facilities and corporate services.

The benefits for the move include improved logistics through the use of shared roads, sort yards and infrastructure, enhanced forest health through coordinated stewardship and integrated best practice approaches to managing the watershed, ecosystem and species at risk, according to a press release.

TimberWest was first acquired by BCI and PSP in 2011, while AIMCo and BCI have been limited partners in Island Timberlands since 2005.

Also, at the beginning of the month, SWFI reported that PSP plans to open a Hong Kong office for 2019, following the path of its peers such as CPPIB and Ontario Teachers' Pension Plan. According to the release, PSP plans to "increase its exposure to Asian assets by hiring more managers and identifying potential co-investments."

PSP also sold off a major Paris office building at the beginning of the month:

The Public Sector Pension Investment Board, alongside global real estate developer Tishman Speyer Properties, is selling Parisian office building Tour Pacific to Société Générale Insurance Group.

After taking on the 53,000 square metre office building in 2013, the two investors renovated and refurbished it, adding 30 tenants. The building features a office spaces, a conference centre, fitness space and lounge. The amount of the transaction was not disclosed.

“Tour Pacific is an exemplary case of PSP’s ability to align itself with best-in-class partners to execute on tactical value creation strategies in core global markets,” said Stéphane Jalbert, managing director of real estate for Europe and Asia Pacific at the PSP. “Tour Pacific was modernized through a comprehensive refurbishment to meet the demands and expectations of today’s tenants, while taking advantage of the unique building design and vibrant La Défense submarket.”

Philippe Joland, senior managing director and president of Tishman Speyer France, noted the company’s goal was to create an appealing office building with new services and amenities, as well as a great work environment. “We also believe that managing the asset directly creates additional value through the development of a unique relationship with the tenants,” he said. “Tour Pacific has become a long-term, high-quality asset with a core profile as evidenced by the sale to Société Générale Insurance.”

More recently, VCCircle reported, PSP, Ferrovial vie for GVK Airport stake:

Canadian pension fund PSP Investments and Spanish infrastructure company Ferrovial are vying to pick up a 49% stake in GVK Airport Holdings Pvt. Ltd, a wholly owned unit of GVK Power and Infrastructure Ltd, a media report said.

The Times of India reported, citing people aware of the development, that GVK will use the funds from the stake sale to invest in the Navi Mumbai airport and pare debt.

GVK Airport holds 50.5% of Mumbai International Airport Ltd (MIAL), which is developing the Navi Mumbai airport. The other shareholders in the Mumbai airport operator are South Africa’s Bidvest Group (13.5%), Airports Company South Africa (10%) and Airports Authority of India (26%).

Citigroup is advising GVK on the stake sale, according to the report. GVK Airport Holdings has a debt of over Rs 8,000 crore, it added.

Last week, GVK Power had received its shareholders’ approval to raise up to Rs 8,000 crore through various options.

Ferrovial operates four airports in the United Kingdom, at Heathrow, Glasgow, Aberdeen and Southampton, according to its website.

Airport Technology also reports, PSP and Ferrovial emerge as final applicants for stake in GVK Airport:

Spanish airport operator Ferrovial and Canada-based Public Sector Pension Investment Board (PSP Investments) have emerged as two final candidates seeking to acquire a majority stake in India’s GVK Airport Holdings.

GVK owns and operates the country’s second busiest Mumbai International Airport. It will also manage the proposed Navi Mumbai International Airport.

The development comes after GVK Power & Infrastructure sought shareholder approval to sell more than 50% stake in its wholly owned subsidiary GVK Airport in a bid to raise up to Rs80bn ($1.13bn), reported timesofindia.indiatimes.com.

Proceeds will be used to pay debt and develop the Navi Mumbai airport. Citigroup is advising GVK over the transaction.


One source told the publication that the share sale to one of the bidders would be limited to 49%. Additionally, GVK Airport may launch an IPO by next year that will help promoters reduce their stake below 50%.

PSP and Ferrovial have emerged as the final bidders for the deal, which also saw participation from infrastructure investor in Australia AMP Capital, Abu Dhabi Investment Authority and Malaysia Airports, among others.

PSP Investments controls Germany-based airport operator AviAlliance, which owns stakes in Hamburg, Düsseldorf, Athens and Budapest airports.

Ferrovial operates Heathrow, Glasgow, Aberdeen and Southampton airports in the UK.

GVK Airport holds a 50.5% share in Mumbai International Airport, which has won the rights to develop the Rs150bn ($2.12bn) Navi Mumbai airport project through a step-down subsidiary.

India is a hot emerging market for Canada's large pensions and there are different ways to invest through public and private markets. This is an infrastructure deal which is a great long-term play in India.

In another recent infrastructure deal, Kirk Falconer of PE Hub Network reports PSP Investments buys 49 pct stake in Stillwater Wind Facility:

Pattern Energy Group Inc (TSX, Nasdaq: PEGI) has acquired a 35 megawatt owned interest in the Stillwater Wind Facility from Pattern Development.

Pattern Energy acquired 51 percent of the class B interests in the Montana wind power facility for about US$23 million.

Canada’s Public Sector Pension Investment Board (PSP Investments), which agreed last year to co-invest US$500 million in projects acquired by Pattern Energy, took 49 percent of the class B interests in Stillwater.

The facility commenced commercial operations in October.

Pattern Energy Group LP, Pattern Energy’s main shareholder, is backed by U.S. private equity firm Riverstone Holdings.

As you can see, it's been a very busy month at PSP Investments and even though they don't have press releases on all these deals, there's a lot of activity involving the pension fund lately.

I also invite you to scroll through PSP's Twitter account here to keep informed of investments and other corporate activities.

Below, NMIA is one of the world’s largest ”Greenfield” international airports, currently proposed for development, offering world-class facilities for passengers, cargo, aircrafts and airlines.The proposed second airport for MMR is located at Navi Mumbai for several reasons. Prominent among them is the fact that Navi Mumbai is expected to cater to the future growth in population, business and commercial activities of MMR.The availability of excellent physical and social infrastructure coupled with an environment-friendly site makes the Navi Mumbai Airport project both technically feasible and financially viable.The Airport master plan will be developed in modules, operated and managed to internationally recognized standards.

NMIA will support the rapidly growing air travel needs of Mumbai Metropolitan Region. It is expected to absorb annually 10 million passengers in its first operational year 2017, 25 million by 2020 followed by 45 million passengers in 2025 and ultimately 60 million by 2030.

Like I said, this is a great long-term investment for PSP and its members.