La Caisse de dépôt et placement du Québec is investing C$62.5 million (€41.3 million; $47.1 million) in equity in WSP Global Group, a Toronto-listed engineering group in which it currently holds an 18 percent stake.
“This investment is in connection with the announcement made today by WSP to acquire MMM Group, a Canadian consulting services leader in the engineering industry, with around 20 offices in Canada, including one in Montreal,” the Canadian pension fund said in a statement.
Separately, WSP announced its intent to acquire MMM Group, which has broad expertise in transportation, infrastructure, environment and buildings as well as a strong presence in the public-private partnership (PPP; P3) market, for C$425 million.
WSP expects the acquisition will bolster its presence in the P3 market across Canada, the US and globally as well as strengthen its foothold in Ontario and the Greater Toronto Area, a market where WSP is looking to increase its market competitiveness.
The engineering group will finance part of the transaction through a C$175 million bought deal public offering, whereby the underwriters will purchase the 4,142,000 common shares on offer at C$42.25 per share – WSP shares traded at C$43.55 on Tuesday – and resell it to the investing public. The underwriters have also been granted an over-allotment option for a period of 30 days after the closing date, which could generate an additional C$26.25 million.
La Caisse and the Canada Pension Plan Investment Board (CPPIB), which currently holds a 17.8 percent stake in WSP, have entered into subscription agreements for a concurrent private placement of common shares. According to the WSP statement, each pension fund will acquire 1,479,290 shares at $42.25 per share, generating total gross proceeds of C$125 million. The option granted to La Caisse and CPPIB to purchase additional common shares will represent additional maximum gross proceeds of up to C$18.75 million.
The transaction, which is subject to customary closing conditions including shareholder approval and is expected to close in the fourth quarter of 2015, is the fourth acquisition WSP has realised since April when it acquired SPL, a Canada-based specialised engineering solutions firm. Last June, it acquired Norwegian project management firm Faveo as well as Levelton, an engineering and scientific services consultancy in Canada.
“This new investment by La Caisse is consistent with the business relationship we have built with WSP, a global firm well rooted in Quebec, to support its growth strategy through acquisition,” said Christian Dube, executive vice president for Quebec at La Caisse.
Last October, WSP merged with Parsons Brinckerhoff, the US professional services division of UK construction company Balfour Beatty, for $1.3 billion.
The C$62.5 million La Caisse will currently invest in WSP, is in addition to the C$420 million it has invested in the company in the past four years.
La Caisse, which serves 32 depositors – primarily public and private pension and insurance funds in Quebec – has been investing in infrastructure for the past 15 years.
It officially launched its infrastructure programme in 2003. As of December 31, 2014, its infrastructure portfolio totaled C$10 billion, representing approximately 4 percent of the fund's total assets under management, which as of June 30, 2015 stood at C$240.8 billion.
In July, the Canadian pension launched CDPQ Infra, an operational subsidiary that will execute major infrastructure projects in the Canadian province following an agreement it reached with the government of Québec earlier this year.