CPPIB ups Peruvian pipeline stake to 34%

Toronto-based Canada Pension Plan Investment Board (CPPIB), administrator to the Canada Pension Plan, has completed the acquisition of a further 23.6 percent stake in TgP, the largest natural gas and natural gas liquids transporter in Peru, bringing its total ownership in the company to 34 percent.

It acquired the additional interest from Tecpetrol International SA, Tecpetrol Internacional SLU and Tecpetrol SA through a right of first refusal (ROFR), CPPIB said in a statement.

The transaction also included the acquisition of 100 percent of TgP’s operator, Compañía Operadora de Gas del Amazonas (COGA), for which CPPIB paid a total of $607 million.

The latest acquisition comes less than two months after the administrator entered the Peruvian infrastructure market with the acquisition of 10.4 percent of TgP which it acquired from Graña y Montero (GyM), Peru’s largest engineering and construction company, for $200 million.

CPPIB expects to acquire an additional 2.4 percent interest in the pipeline company from Enagás Internacional and 0.4 percent from Corporación Financiera de Inversiones, bringing its total ownership interest in TgP to 36.8 percent and making the Canadian administrator TgP’s largest shareholder.

The Canadian investment manager has also agreed to sell 51 percent of COGA to GyM and 30 percent to Enagás, a global gas line operator, with CPPIB retaining 19 percent of COGA.

“CPPIB’s significant ownership position demonstrates our belief in TgP’s potential and our confidence in management’s proven track record,” said André Bourbonnais, CPPIB’s senior vice president, private investments.

“We believe the CPPIB’s investment in COGA, combined with the expertise of our partners will contribute to TgP’s continued success,” he said.

The investment in TgP in late January marked CPPIB’s entry into the Peruvian infrastructure sector and its third such investment in Latin America, a region in which the investment manager has expressed interest.

Select markets CPPIB has identified as being attractive for investment in general are Brazil, Chile, Peru, Colombia and Mexico.

The investment manager already has a presence in Chile, dating back to 2007 when it acquired a 27 percent interest in Transelec Chile for C$364 million (€236 million; $326 million). At that time, the Transelec power system supplied electricity to approximately 99 percent of Chile’s population, according to CPPIB.

In April 2012, CPPIB made its second infrastructure investment in Chile by acquiring 49.99 percent of toll road operator Grupo Costanera for C$1.15 billion.

The pension fund has said that it prefers certain infrastructure sub-sectors over others and is primarily interested in long-term, steady cash flows and a strongly regulated environment. As a result, CPPIB is more interested in sub-sectors such as transportation, energy/energy infrastructure, and water.

CPPIB is an investment management organisation that invests the funds not needed by the Canada Pension Plan to pay current benefits on behalf of 18 million Canadian contributors and beneficiaries. In addition to infrastructure, CPPIB also invests in public equities, private equities, real estate, and fixed-income instruments.

As of September 30, 2013, the CPP fund totalled C$192.8 billion.