Canada Pension Plan bids above market for Macquarie fund(3)

The Canadian investor has bid two thirds over the share price to gain control of Macquarie Communications Infrastructure Group, which has a debt burden of more than A$5bn. If approved, the transaction would mark the second take-private of a Macquarie-managed specialist fund.

Canada Pension Plan Investment Board (CPPIB) has bid over 60 percent above the current share price for a Macquarie-run infrastructure fund that has suffered consistently low valuations of its assets.

The Canadians offered A$1.37 billion (€710 million; $930 million) in cash for Sydney-listed Macquarie Communications Infrastructure Group (MCIG), a 67 percent premium on the share price.

CPPIB still described the valuation as “attractive”, saying the acquisition would give it a diversified portfolio of radio and television transmission assets with strong cash flows at an attractive price.

MCIG's independent directors have unanimously recommended that shareholders vote to approve the bid. The fund has been trying to boost its share value without success for some time, the firm said.

If approved, it would be the second take-private of a Macquarie-managed specialist fund. In August 2008, the shareholders of Macquarie Capital Alliance Group voted in favour of a proposal that de-listed the Sydney Stock Exchange-listed fund, which gave investors the opportunity to co-invest with Macquarie Capital and Macquarie Capital clients.

Ulike the MCAG transaction, though, the CPP offer for MCIG will also result in a change of management. The Canadian pension will also acquire MCIG's Macquarie-controlled managing entity, Macquarie Communications Infrastructure Management Limited, in a separate transaction.

Macquarie said in a press release earlier this month that a number of its specialist listed funds, such as MCIG, are undertaking initiatives to close the gap between their net asset values and market valuations, such as asset sales, fund privatisations, share buybacks and debt refinancings.

Macquarie says the fund’s enterprise value is $7.3 billion, includes net debt of A$5.3 billion and exchangeable bonds of A$570 million.

Cezary Podkul contributed reporting to this article.