Government Fund Weekly News Roundup — CPPIB’s $4.6 Billion Petco Deal
The Canada Pension Plan Investment Board (CPPIB) teamed up
with CVC Capital Partners to buy U.S. pet-store chain Petco.
Government funds paid $7.5 billion for Australian electricity
assets. Plus two sovereign wealth funds built on their New York
real estate portfolios.
CPPIB Invests in Creature Comforts
On Monday, the $215 billion Canada Pension Plan Investment Board
(CPPIB) announced one of the biggest private equity deals of
2015. The pension fund teamed up with London-based CVC Capital
Partners to buy San Diego-based Petco Animal Supplies, which
operates 1,400 stores across the U.S. and Latin America, for
$4.6 billion. The partners obtained approximately $3 billion in
debt financing to secure the deal.
The acquisition followed an extended game of cat-and-mouse
between Petco and Arizona-based PetSmart, a rival pet-store
chain. PetSmart had launched several bids to acquire Petco in
2014 and 2015, but talks repeatedly fell through —
clearing the way for CPPIB and CVC to pounce.
The multi-billion dollar U.S. pet industry is now somewhat
crowded with government investors. PetSmart was bought last
year by a consortium that included the $195 billion Caisse de dépôt et placement du
Québec (CDPQ), Singapore’s $343 billion
GIC and the $84.7 billion Korea Investment Corp. Those
investors paid $8.7 billion for PetSmart — almost
twice the value of the Petco deal. Still, even in the uncertain
world of international finance, America’s passion
for pets looks like something of a sure bet.
More Infrastructure Deals Down Under
The fierce bidding war for TransGrid, an electricity
distribution network in New South Wales, finally reached its
climax this week — and a consortium backed by
government funds emerged victorious.
The investor group, which came together under the name NSW
Energy Networks, was led by two local infrastructure investors,
Melbourne-based Hastings Funds Management and Sydney-based
Spark Infrastructure; it also included CDPQ, the $621 billion
Abu Dhabi Investment Authority and Wren
House Infrastructure, a unit of the $592 billion Kuwait Investment Authority. The
consortium paid the state government A$10.3 billion ($7.5
billion) for a long-term lease on the assets after beating
several rival bids.
ADIA closed another infrastructure deal in Australia this
week. The Abu Dhabi fund backed Melbourne-based toll-road
operator Transurban Group’s A$1.8 billion purchase
of AiportLinkM7, a motorway that connects Brisbane Airport with
the center of the city. ADIA contributed A$131 million to
the deal through its subsidiary Tawreed Investments.
SWFs Eye Real Estate Investments in NYC
In a busy week for ADIA, the fund also added to its portfolio
of U.S. hotels. The fund acquired the London Hotel in Manhattan
from New York-based alternative investment giant Blackstone
Group for a reported $382 million. ADIA already owns two hotels
in New York: the Hyatt Times Square and the Marriott Edition
near Madison Square Park.
Meanwhile Norges Bank Investment Management (NBIM), the arm of
the central bank that oversees Government Pension Fund Global, Norway's
$830 billion sovereign wealth fund, formed a joint venture with
Trinity Wall Street Episcopal Church to acquire a stake in the
church's portfolio of 11 office properties in Manhattan's
Hudson Square neighborhood. NBIM paid $1.56 billion for its 44
percent stake in the portfolio.