PSP Investments Expands Portfolio with 407 ETR Acquisition
PSP Investments Acquires Stake in 407 ETR
Transaction Highlights:
- PSP Investments has secured a significant minority stake of 7.51% in the 407 Express Toll Route (407 ETR) from CPP Investments.
- CPP Investments and Ferrovial are set to acquire a combined 6.76% interest in 407 ETR from AtkinsRéalis.
- This strategic move positions 407 ETR for long-term success amidst rising traffic demands.
In a significant addition to its extensive portfolio, PSP Investments has entered into agreements to acquire a notable stake in the 407 Express Toll Route (407 ETR), a highly utilized toll highway spanning 108 kilometers. This strategic transaction has emerged as a key development in the investment landscape, reflecting PSP's commitment to expanding its infrastructural footprint.
Details of the Acquisition
PSP Investments will invest approximately $2.39 billion for this acquisition, which includes immediate payment at closing and a deferred component payable within 18 months. This capital deployment emphasizes PSP's determination to enhance its road asset portfolio globally.
At the same time, AtkinsRéalis, a leading engineering services and nuclear company, is set to divest its remaining 6.76% stake in 407 ETR to CPP Investments and Ferrovial. Through this transaction, CPP Investments anticipates acquiring a 1.70% interest, aligning with the deferred payment model established by PSP Investments. Overall, CPP Investments expects a net return of approximately $2.39 billion from these transactions.
Once these transactions are finalized, the ownership of 407 ETR will be restructured, with Ferrovial holding 48.29%, CPP Investments alongside other institutional investors at 44.20%, and PSP Investments maintaining 7.51%. With these changes, AtkinsRéalis will exit as a shareholder.
Statements from Key Executives
Sandiren Curthan, Managing Director and Global Head of Infrastructure Investments at PSP Investments, expressed enthusiasm for joining shares with CPP Investments and Ferrovial. He emphasized that PSP's investment in 407 ETR is its most significant infrastructure undertaking in Canada, signifying a dedication to supporting reliable transportation systems for more than three million Canadians each week.
James Bryce, Managing Director at CPP Investments, highlighted the prospect of optimizing returns for contributors while reinforcing relationships with PSP Investments and Ferrovial. The intention is to maintain a strong investment position in this vital asset, serving individual and business customers effectively.
Ignacio Madridejos, CEO of Ferrovial, acknowledged PSP Investments' joining, emphasizing a shared long-term commitment to enhancing mobility and growth in the Greater Toronto Area.
PSP Investments: A Brief Overview
The Public Sector Pension Investment Board (PSP Investments) stands as one of Canada's largest pension entities, boasting $264.9 billion in assets under management. Established in 1999, it manages a diverse collection of global investments across various sectors, including capital markets, private equity, infrastructure, real estate, and natural resources.
PSP Investments operates from its headquartered office in Ottawa and has additional offices in key financial centers such as New York, London, and Hong Kong, facilitating its extensive investment reach.
About CPP Investments
Managed independently, the Canada Pension Plan Investment Board (CPP Investments) oversees the Fund in the best interests of more than 22 million contributors and beneficiaries. Its portfolio is globally diversified, encompassing public equities, private investments, and infrastructure, showcasing a robust investment strategy.
About Ferrovial
Ferrovial maintains a prominent presence as a global leader in infrastructure, operating in over 15 countries with a workforce exceeding 25,000 employees. Its commitment to sustainability and compliance with UN principles underscores its corporate ethos, further enhancing its credibility in the infrastructure domain.
Frequently Asked Questions
What is the significance of PSP Investments acquiring a stake in 407 ETR?
This acquisition highlights PSP's strategic focus on enhancing its portfolio with critical infrastructure assets, ensuring long-term stability and growth.
How much did PSP Investments invest in 407 ETR?
PSP Investments invested approximately $2.39 billion for a 7.51% stake in 407 ETR, with payments structured for immediate and deferred timelines.
What are the ownership changes after the transaction?
Post-transaction, ownership of 407 ETR will be realigned, with Ferrovial at 48.29%, CPP Investments at 44.20%, and PSP Investments at 7.51%.
Who are the key players involved in the transaction?
The main participants in this acquisition are PSP Investments, CPP Investments, Ferrovial, and AtkinsRéalis.
What is the strategic importance of the 407 ETR?
407 ETR serves over three million Canadians weekly, making it a vital component of transportation infrastructure in the region, crucial for mobility and economic growth.
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