Briefing

Canada Pension Plan Investment Board to buy 10.01 per cent stake in Highway 407 from SNC-Lavalin for $3.25 billion

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The deal will make CPPIB the majority stakeholder at 50.1 per cent, up from 40 per cent. SNC-Lavalin will retain a 6.8 per cent stake in the highway and use the proceeds from the sale to pay off debt, including $600 million to the Caisse de dépôt et placement du Québec. (Bloomberg)

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Talking point: The deal ends months of wrangling between pension giant CPPIB, Spanish developer Cintra Global and another pension giant, OMERS—all of which tried to buy parts of SNC-Lavalin’s stake. For SNC-Lavalin, this deal provides badly needed cash, as its stock has dropped 37.39 per cent in the past year, and it’s in the midst of a public fight with its largest shareholder, the Caisse, which is calling for a fundamental restructure of the company’s business. For CPPIB, this deal allows it to bring in more revenue from an asset that’s been performing well for it for years, while it’s taking a growing number of bets on newer—and potentially riskier—investments. On Monday, the board announced plans to set up a credit arm in India’s capital-starved financial sector, part of a long-term investment-diversification strategy. Tech investments are also a big part of the effort —earlier this year, the board invested $166 million in software company Visma Group, and participated in a US$11-million buyout of Ultimate Software, a human-resources app developer.