Canada Pension Funds Invest $700 Million in XPO Logistics

Canada’s Public Sector Pension Investment Board (PSP Investments) and the Ontario Teachers’ Pension Plan have joined together with one other firm (GIC, Singapore’s sovereign wealth fund) to invest a combined $700 million in XPO Logistics, a transportation logistics firm.

More details from Market Watch:

The transaction, which is complete and scheduled to settle on September 17, 2014, provides for the sale of newly issued common stock and preferred stock to the Investors. Upon approval by the company’s shareholders, the preferred stock will be converted into common stock and the Investors will hold approximately 22% of XPO’s common stock on a fully diluted basis. The $30.66 price per share of common stock issuable to the Investors represents a 5% discount to the trailing 20-day volume weighted average price. Bradley Jacobs and Jacobs Private Equity, LLC intend to vote in favor of the stock issuance. Jacobs Private Equity, LLC will remain the company’s largest shareholder.

Bradley Jacobs, chairman and chief executive officer of XPO Logistics, said, “We’re delighted to welcome PSP Investments, GIC and Ontario Teachers’ Pension Plan as significant shareholders in XPO. This strategic investment by three blue chip institutions is a strong endorsement of our plan for value creation. With the benefit of $700 million of additional equity to accelerate our growth, we can capitalize on an acquisition pipeline that’s livelier than expected. We’re now targeting approximately $9 billion of revenue and $575 million of EBITDA for 2017.”

The vice-presidents of PSP and the OTPP both released statement regarding the investment. From Market Watch:

Daniel Garant, senior vice-president, public markets for PSP Investments, said, “We are pleased to become a meaningful shareholder of XPO and support its board and management as it pursues its growth strategy. This investment in XPO is consistent with our Value Opportunities Portfolio’s mandate, which includes making strategic investments in publicly-listed companies that we believe have the capability of generating above average risk-adjusted returns over time and where PSP Investments can leverage its permanent and growing capital base over a long-term investment horizon.”

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Michael Wissell, senior vice-president, public equities for Ontario Teachers’ Pension Plan, said, “Teachers’ believes in partnering with world-class entrepreneurs. We are pleased to invest alongside Brad Jacobs and his team. Their plans for XPO align with our approach to long-term value creation.”

The OTPP is the largest single-profession retirement fund in Canada and manages over $140 billion in assets.

PSP Investments manages $93 billion of assets.