A group of U.K. pension funds and the Canada Pension Plan Investment Board, Toronto, will acquire a 30% stake in Associated British Ports.
The stake, which might increase by a further 3.33%, will be acquired by CPPIB and Hermes Infrastructure, part of Hermes Investment Management. The two have agreed to invest about £1.6 billion ($2.4 billion). Spokeswomen for both firms said they were not disclosing the investment split.
Hermes Infrastructure invests on behalf of a group of U.K. corporate and local authority pension funds, including the £10 billion Santander (U.K.) Common Investment Fund, Manchester, England.
CPPIB and Hermes Infrastructure are acquiring the stake in Associated British Ports from Goldman Sachs Infrastructure Partners and Infracapital, said a joint statement from both parties. Borealis Infrastructure, the infrastructure arm of the C$72 billion ($57.2 billion) Ontario Municipal Employees Retirement System, and Government of Singapore Investment Corp., remain shareholders. GIC's portfolio is estimated at $320 billion by the Sovereign Wealth Fund Institute.
The deal is subject to antitrust clearances, and is expected to close this summer.
Associated British Ports owns and operates 21 ports in England, Scotland and Wales.
The Santander pension fund backed the deal with £50 million of its own segregated allocation, “on top of our exposure through the Hermes Infrastructure Fund,” said Antony Barker, director of pensions at Santander U.K., in an e-mail. “It's a core asset, which some might think is a bit 'on piste' for us, but it's a very good core asset. Being an island nation, we have the opportunity to utilize our coastline to (our) best advantage — ABP supports 84,000 jobs, and so contributes billions to the U.K. economy every year, handling over 94 million tons of cargo in 2013 alone. More importantly, the company weathered the recent years of economic volatility and the downturn very well; with all the uncertainty over markets, politics and pensions, there's a lot to be said for having a safe haven — or 21.”
CPPIB has C$238.8 billion of assets, with about C$13.1 billion invested in global infrastructure. Hermes Investment Management has £28.6 billion in assets under management.