REAL ESTATE - Two Canadian pension funds are slugging it out in a bidding war for Associated British (AB) Ports.
A Macquarie-led consortium including Canada Pension Plan (CPP) Investment Board on Thursday urged AB Ports shareholders not to a respond to a revised offer from Admiral Acquisitions, a rival consortium led by Goldman Sachs. A significant minority shareholder in Admiral is Borealis, the infrastructure investment arm of Ontario Municipal Employees Retirement System (OMERS).
The Macquarie bid – which the acquisition target claimed was worth “at least” £2.58bn (€3.78m) – upped the ante significantly, with one UK newspaper claiming AB Ports had agreed to open its books to the Australian bank.
Asked whether the fund planned further infrastructure investments, and whether they would be with Macquarie, spokesman John Capelletti said: “Yes and yes.”
Public pension fund CPP plans substantially to expand its infrastructure investments because the sector offers stable real rates of return, returns that are positively correlated with inflation but relatively insensitive to fluctuations in the business cycle, and consistently high barriers to entry.
Capelletti added: “As long as it has those characteristics, we’ll look at infrastructure – ports included.”
To date CPP has invested CAN$350m in infrastructure with Macquarie. Infrastructure currently makes up 0.4% of the pension fund’s overall portfolio, compared with 4.3% invested in real estate.
“Our strategy has been to move at a measured pace in infrastructure, investing first as a fund participant and then alongside the fund manager,” said the firm.
Cappelletti declined either to comment on the likely outcome of the ongoing bidding war or to hazard a timeframe for the decision.
AB Ports owns 21 UK ports, including Hull, Grimsby, Southampton, Cardiff and Newport.