The manager of Quebec's provincial pension fund assets is riding the rails.
Caisse de Depot et Placement du Quebec, Montreal, on Nov. 19 agreed to acquired a 30% stake in Bombardier Transportation U.K. Ltd., a newly created holding company for the rail unit of Canadian transportation company Bombardier Inc.
Caisse, which manages C$240.8 billion ($180.7 billion) in Quebec retirement and other assets, will pay $1.5 billion for the common equity stake in BT Holdco, which will be executed through a private placement that values the rail unit at $5 billion, Caisse said in a news release. Bombardier will retain the remaining 70% interest.
Bombardier chose the Caisse investment after previously considering an initial public offering or private-placement auction.
The agreement cedes much control over operation of the unit to Caisse. If BT Holdco outperforms its business plan, Caisse will reduce its stake by 2.5% annually over five years, but it will increase its holdings by 2.5% annually if the unit underperforms.
The deal is the second in seven months in which Caisse acquired a minority interest in a high-profile Quebec-based company. In April, Caisse announced it would take an undisclosed stake in Montreal-based entertainment firm Cirque du Soleil from its founder, Guy Laliberte. TPG acquired a majority stake in Cirque du Soleil.