Tuesday 09 August 2016 by Alen Golubovic Company updates

Canadian pension fund to take 20% stake in Plenary Group

On 9 August 2016, Caisse de dépôt et placement du Québec (CDPQ) entered into an agreement to acquire a 20% stake in Plenary Group Holdings (Plenary), which controls all of Plenary Group’s Australian operating businesses and infrastructure asset portfolio

Overlooking a city at night

As part of this transaction, Plenary will issue new shares as part of securing additional capital to fund new projects.

CDPQ is a long term institutional investor that manages funds primarily for public and parapublic pension and insurance plans. As at December 31, 2015, it held CAD248bn in net assets. CDPQ is a long term partner of Plenary, having invested more than $200m in seven Plenary originated Australian projects since 2012, including the Victorian Comprehensive Cancer Centre. The $1bn cancer research and treatment centre was delivered on time and on budget, and opened in June this year.

We believe that the sale is positive for Plenary; having a long standing partner as a shareholder should strengthen Plenary’s financial position and provide it with the opportunity to further pursue large public infrastructure projects expected to be carried out over the coming years. We also view it as a vote of confidence in Plenary’s business model.

The Plenary Bond Finance Unit Trust 7.50% AUD bond is indicatively offered at a yield to worst of 5.40%. The bond is secured by Plenary’s equity interests across eight infrastructure projects. While Plenary itself does not provide direct support to the bond (the bond relies on the equity distributions from the 8 infrastructure projects to service its coupon), we see the transaction as positive for the bond because of the strengthening of Plenary’s financial position (and as such, its continued ability to own and manage the projects which fall under the bond).

The transaction is subject to a number of government approvals and consents. A link to Plenary’s media release is available here.External link - opens in a new window

Please contact your FIIG representative for further information on the Plenary Bond Finance Unit Trust AUD bond. Available to retail and wholesale investors at a minimum face value of AUD10,000.